India has reached a historic milestone with foreign direct investment (FDI) inflows surpassing USD 1 trillion since April 2000, according to the Department for Promotion of Industry and Internal Trade (DPIIT). This included equity investments, reinvested earnings, and other capital inflows. In the first half of FY 2024-25 alone, FDI surged by 26 per cent, totaling USD 42.1 billion. The Ministry of Commerce and Industry emphasised that FDI has played a transformative role by providing non-debt financial resources, fostering technology transfers, and creating employment opportunities.
Top FDI sources: Small nations lead the pack
Mauritius and Singapore dominate
Mauritius emerged as the largest contributor, accounting for 25 per cent of FDI inflows, closely followed by Singapore at 24 per cent. The United States ranked third with 10 per cent, while other key investors included the Netherlands (7 per cent), Japan (6 per cent), and the United Kingdom (5 per cent). Smaller contributors like the UAE, Cayman Islands, Germany, and Cyprus added 2 per cent-3 per cent each.
The Mauritius advantage
Mauritius’ dominance is tied to its favourable tax treaties with India, which streamline and incentivize investment flows. Interestingly, Mauritius, with a GDP smaller than Himachal Pradesh’s GSDP of Rs 1.91 lakh crore (FY24), has outpaced global giants in investments.
Services sector takes the lead
The services sector, including financial services, IT, and consultancy, garnered the highest FDI inflows. Other key sectors included computer software and hardware, telecommunications, trading, and infrastructure.
Boost for manufacturing
Manufacturing has seen a 69 per cent growth in FDI over the past decade, largely driven by the “Make in India” initiative.
A decade of accelerated growth
Of the USD 1 trillion in FDI, USD 709.84 billion was recorded in the last decade (April 2014 to September 2024), accounting for nearly 69 per cent of total FDI since 2000. The Ministry attributed this to reforms like Make in India, liberalised FDI policies, and the implementation of the Goods and Services Tax (GST).
India as a global investment hub
India’s competitive labour costs, ease of doing business, and sustained reforms have made it a top investment destination. Most sectors allow 100 per cent FDI under the automatic route, with minimal restrictions in strategic areas like telecommunications and insurance.
Recent reforms, such as the abolition of the angel tax on startup funding and lower corporate tax rates for foreign companies, have further enhanced India’s investment climate.
Comparing FDI with India’s economy
To understand the scale of USD 1 trillion, earning USD 1 per second would take over 31,000 years to reach this figure. India’s GDP in 2024 stands at USD 3.89 trillion, a substantial leap from USD 2 trillion in 2014, reflecting the economy’s rapid growth.
Future outlook
India’s USD 1 trillion FDI milestone highlights its growing prominence in the global economic order. With 60 sectors and 31 states benefiting from investments, the government expects further growth, underscoring its commitment to sustainable development.
The Ministry of Commerce and Industry stated, “India is well-positioned to strengthen its global role, fostering economic growth and aligning with international trends.”
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