India recorded a 15% rise in Foreign Direct Investment (FDI) during April–June FY26, with inflows reaching USD 18.62 billion compared to USD 16.17 billion in the same period last year. The United States emerged as the largest source of FDI, nearly tripling its investments despite tariff disputes.
Key FDI Highlights (Apr–June FY26)
- FDI Inflows: USD 18.62 billion (15% rise YoY).
- Total FDI (equity + reinvested earnings + other capital): USD 25.2 billion, up from USD 22.5 billion in Q1 FY25.
- Previous Trend: In the March 2024-25 quarter, FDI inflows had declined by 24.5% year-on-year.
Top Sources of FDI
- United States: USD 5.61 billion (vs. USD 1.5 bn last year).
- Singapore: USD 4.59 billion.
- Mauritius: USD 2.08 billion.
- Cyprus: USD 1.1 billion.
- UAE: USD 1 billion.
- Other contributors: Cayman Islands, Netherlands, Japan, and Germany.
Cumulative Investments (2000–2025)
- Mauritius: USD 182.2 billion.
- Singapore: USD 179.48 billion.
- USA: USD 76.26 billion (third-largest).
Sector-Wise Investment Trends
- Computer Software & Hardware: USD 5.4 billion.
- Services: USD 3.28 billion.
- Automobiles: USD 1.29 billion.
- Non-conventional energy: USD 1.14 billion.
Trading, chemicals, telecom, and construction development also attracted inflows.
State-Wise FDI Distribution
- Karnataka: USD 5.69 billion (highest).
- Maharashtra: USD 5.36 billion.
- Tamil Nadu: USD 2.67 billion.
- Others: Gujarat, Haryana, Delhi, Telangana.
Policy and Reform Measures
- India allows 100% FDI in most sectors under the automatic route.
- 2014–2019 reforms: Higher FDI caps in defence, insurance, pensions; liberalisation in aviation, retail, and construction.
- 2019–2024 reforms: 100% FDI in coal mining, contract manufacturing, insurance intermediaries.
- 2025 Union Budget: Proposal to raise FDI limit in insurance companies from 74% to 100%, provided the premium is fully invested in India.
Important Takeaways for Exam
- Foreign Direct Investment (FDI) is the investment made by a company or individual from one country into business interests located in another country.
- FDI typically involves acquiring a significant stake in a company or setting up new operations such as subsidiaries, joint ventures, or branches.
- The primary legislation governing FDI in India is the Foreign Exchange Management Act (FEMA).
- FEMA regulates foreign exchange and foreign investment in India.
- The Reserve Bank of India (RBI) administers FEMA and oversees FDI regulations.