India’s foreign direct investment (FDI) inflows declined by 24.5 per cent year-on-year to $9.34 billion in the January-March quarter of 2024-25, according to government data released on Tuesday. The corresponding figure for the same quarter last year was $12.38 billion. Despite the quarterly drop, the country recorded a 13 per cent rise in total FDI equity inflows for the full financial year 2023-24, reaching $50 billion compared to $44.42 billion in the previous fiscal.The contraction in the January-March quarter follows a similar trend in the preceding quarter (October-December 2024-25), where inflows had dipped 5.6 per cent year-on-year to $10.9 billion, largely due to global economic uncertainties.FDI sources and sector-wise trendsSingapore remained the top FDI contributor with $14.94 billion, accounting for 30 per cent of total equity inflows in 2024-25. It was followed by Mauritius ($8.34 billion), the US ($5.45 billion), the Netherlands ($4.62 billion), and the UAE ($3.12 billion). Other notable contributors included Japan, Cyprus, the UK, Germany and the Cayman Islands. Inflows from countries such as the Netherlands, Japan, the UK and Germany declined compared to the previous year.Sectorally, key gainers included services, trading, telecommunication, automobile, construction development, non-conventional energy, and chemicals. The services sector alone attracted $9.34 billion, up from $6.64 billion in 2023-24. Non-conventional energy inflows rose to $4 billion from $3.76 billion. However, sectors such as computer software and hardware, construction (infrastructure activities), and pharmaceuticals witnessed a decline in foreign investment.Manufacturing FDI saw robust growth, rising 18 per cent to $19.04 billion from $16.12 billion in the previous year.Maharashtra, Karnataka, and Delhi top FDI destinationsAmong states, Maharashtra retained its lead with $19.6 billion in inflows, accounting for 39 per cent of total FDI equity. Karnataka followed with $6.61 billion (13 per cent), and Delhi with $6 billion (12 per cent). Gujarat, Tamil Nadu, Haryana, and Telangana were also among the key destinations attracting significant foreign investment.Policy support and long-term trendsThe total FDI, which includes equity inflows, reinvested earnings, and other capital, rose by 14 per cent to $81.04 billion in 2024-25- the highest in three years – up from $71.3 billion in 2023-24.The commerce and industry ministry reaffirmed India’s investor-friendly FDI policy framework, which permits 100 per cent FDI under the automatic route in most sectors. The policy is continuously reviewed to keep India attractive and competitive for global investors.Between 2014 and 2025, India received $748.78 billion in FDI, marking a 143 per cent increase over the $308.38 billion received between 2003 and 2014. This accounts for nearly 70 per cent of the total $1,072.36 billion FDI received over the past 25 years. The number of source countries also grew from 89 in 2013-14 to 112 in 2024-25, reflecting India’s growing global appeal.Key FDI liberalisation measures implemented between 2014 and 2024 include higher caps in sectors like defence, insurance, and pensions, as well as 100 per cent FDI in coal mining, contract manufacturing, and insurance intermediaries. The 2025 Union Budget has proposed increasing FDI limits from 74 per cent to 100 per cent for insurance companies investing their entire premium within India.
