India Likely to Close FY26 with Gross FDI of More than $90 Billion, Says CEA Nageswaran

Why It Matters

Crossing the $90 billion threshold signals India’s growing appeal as a global investment hub and underpins future economic expansion, while policy reforms are lowering barriers for multinational firms.

Key Takeaways

• FDI could exceed $90 billion, about 2% of India’s GDP
• April‑February gross inflows rose 18.1% to $88.3 billion
• Net FDI jumped to $6.3 billion from $1.5 billion
• Singapore, US, Mauritius, Japan, Netherlands account for 75% of inflows
• Regulatory Compliance Burden cuts 42,000 obligations across 670 acts

Pulse Analysis

India’s FDI surge to over $90 billion in FY 2025‑26 marks a watershed moment for the nation’s capital markets. The $88.3 billion gross inflow recorded through February represents an 18.1% year‑on‑year increase, pushing the total close to 2% of GDP – a level not seen in a full fiscal year before. Compared with the $70‑80 billion range of the previous four years, the jump underscores a robust re‑acceleration of foreign capital, driven by both macro‑economic stability and a favorable policy environment.

Sectoral analysis reveals that manufacturing, computer services, financial services, business services and communication services together absorbed more than two‑thirds of equity inflows. Green‑field projects have been especially vibrant, with announcements worth roughly $73 billion from industry leaders such as Amazon, Microsoft, Google, General Catalyst and MUFG Bank. Singapore, the United States, Mauritius, Japan and the Netherlands remain the dominant source nations, contributing around 75% of total FDI, reflecting deepening strategic ties and confidence in India’s long‑term growth prospects.

Policy reforms are a key catalyst behind the inflow. The Regulatory Compliance Burden (RCB) initiative eliminated over 42,000 compliance requirements across 670 statutes, while the Jan Vishwas Act 2023 and its 2026 successor replaced criminal penalties with civil fines for hundreds of provisions. These measures, combined with streamlined approval processes and infrastructure upgrades, have boosted India’s ranking to 15th in UNCTAD’s World Investment Report. As the country continues to liberalise its investment climate, analysts expect the FDI pipeline to remain strong, supporting higher productivity and job creation in the coming years.