India has crossed a major milestone as it becomes one of the top global investment destinations. According to the Department for Promotion of Industry and Internal Trade (DPIIT), the cumulative Foreign Direct Investment (FDI) in India has hit USD 1,033.40 billion (or $1 trillion) from April 2000 to September 2024.
This achievement highlights India’s continued attraction for foreign investors, with a notable surge in recent years.
A Perspective on the $1 Trillion Mark
To put the trillion-dollar figure into perspective, if a person were to earn $1 per second, it would take them over 31,000 years to accumulate $1 trillion. India’s GDP for 2024 is around $3.89 trillion, while the FDI inflow of $1 trillion over the last two decades demonstrates significant foreign confidence in the country’s economic potential.
Where Did the FDI Come From?
Surprisingly, the largest contributor to FDI in India is not the United States or China, but Mauritius. Over 25% of all FDI has come via this route, closely followed by Singapore at 24%. The United States contributes 10%, while other significant investors include The Netherlands (7%), Japan (6%), the United Kingdom (5%), and the UAE (3%).
Top Sectors Attracting FDI
The services and allied sectors received the most FDI, particularly in areas like computer software and hardware, telecommunications, trading, construction, infrastructure development, automobiles, chemicals, and pharmaceuticals.
FDI Inflows Surge in Recent Decade
Between 2014 and 2024, FDI inflows have skyrocketed by 119% compared to the previous decade, amounting to USD 667.4 billion. This surge underscores India’s growing appeal as a prime investment destination.
FDI Policy Reforms and ‘Make in India’ Initiative
India’s liberalized investment policies, alongside the ‘Make in India’ initiative, have been instrumental in driving FDI growth, particularly in the manufacturing sector, which saw a 69% rise in FDI over the last ten years.
FDI Routes and Restrictions
FDI is primarily allowed through the automatic route in most sectors. However, sectors like telecom, media, pharmaceuticals, and insurance require government approval. Some sectors, including gambling, lottery, real estate, and tobacco manufacturing, remain prohibited for foreign investment.
