United Nations | January 23, 2026 | Economy India
Foreign Direct Investment (FDI) inflows into India recorded a sharp rebound in 2025, rising 73 per cent year-on-year to USD 47 billion, according to the latest assessment released by the United Nations. The strong increase was driven primarily by large investments in the services and manufacturing sectors, supported by policy measures aimed at integrating India more deeply into global supply chains.
The UN’s findings underline India’s growing attractiveness as a long-term investment destination at a time when global capital flows remain under pressure due to geopolitical uncertainty, high interest rates, and slowing growth in several advanced economies.
Services and Manufacturing Lead the FDI Revival
According to the UN report, the services sector—including financial services, digital platforms, IT-enabled services, and business outsourcing—continued to be the largest recipient of foreign capital. At the same time, manufacturing FDI saw a notable acceleration, reflecting multinational companies’ efforts to diversify production bases and reduce overdependence on a single geography.
Sectors such as:
- Electronics and semiconductors
- Automobiles and electric vehicles
- Renewable energy and green manufacturing
- Pharmaceuticals and specialty chemicals
attracted sustained foreign investor interest during the year.
The report noted that India is increasingly being viewed not just as a consumer market, but also as a strategic manufacturing and export hub.
Policy Support Strengthens Investor Confidence
The United Nations highlighted that India’s improved FDI performance in 2025 was closely linked to policy reforms and facilitation measures undertaken over recent years. These include:
- Liberalisation of FDI norms in key sectors
- Production-Linked Incentive (PLI) schemes
- Ease-of-doing-business reforms
- Infrastructure expansion across logistics, ports, and digital connectivity
Together, these initiatives have helped align India with evolving global supply chain strategies, especially in the context of geopolitical realignments and the push for “China-plus-one” sourcing models.
India Stands Out Amid Global FDI Uncertainty
Globally, FDI flows remained uneven in 2025, with several emerging and developed economies witnessing muted or negative growth in foreign investments. Against this backdrop, India’s 73 per cent growth rate stands out as one of the strongest performances among major economies.
UN officials observed that countries with policy stability, large domestic markets, and scalable manufacturing ecosystems were better positioned to attract capital, placing India among the top beneficiaries of shifting global investment patterns.
Strategic Implications for India’s Growth Story
Economists believe the sharp rise in FDI inflows has significant long-term implications for India’s economy. Higher foreign investment not only supports capital formation but also contributes to:
- Technology transfer
- Job creation
- Export competitiveness
- Productivity gains
Increased FDI in manufacturing is also expected to strengthen India’s ambition of becoming a global manufacturing powerhouse, while services-led investments reinforce its leadership in the digital and knowledge economy.
Outlook: Sustaining Momentum Will Be Key
While the UN report paints an optimistic picture, experts caution that sustaining FDI momentum will depend on continued reforms, policy consistency, and global economic conditions. Maintaining macroeconomic stability, accelerating infrastructure projects, and ensuring regulatory clarity will be critical to keeping India attractive to long-term investors.
Nevertheless, the strong FDI rebound in 2025 signals growing international confidence in India’s economic fundamentals and its role in the reconfiguration of global trade and investment flows.
(Economy India)
