India received $38.89 billion in foreign direct investment in 2025, up nearly 44%, and rose two places to become the world’s 11th-largest FDI recipient. The improvement deserves notice. Inflows into developing economies increased by only 2% during the year.
The amount is still modest for an economy of India’s size. China received $104.66 billion despite slower growth and geopolitical pressure. The United States attracted $277 billion.
India FDI rises as greenfield pledges fall
The Union government has spent a decade trying to draw manufacturing investment through Make in India, production-linked incentives, industrial corridors and semiconductor subsidies. The PLI schemes have a combined outlay of ₹1.97 lakh crore, while the India Semiconductor Mission was launched with ₹76,000 crore.
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These schemes reduce some of the cost of entering India. They cannot settle the questions attached to a factory expected to operate for 20 years.
Manufacturers still have to account for land acquisition delays, state-specific approvals, old tax disputes, slow contract enforcement and tariff changes. An OECD review published in 2025 identified legal and regulatory barriers as a major constraint on private infrastructure investment in India. UNCTAD also cited tariff uncertainty, supply-chain shifts and weaker sentiment as restraints on new manufacturing commitments.
The greenfield numbers capture this hesitation. Announced greenfield investment in India fell from $111.14 billion in 2024 to $74.12 billion in 2025, even as recorded FDI inflows rose sharply. The two measures are not directly comparable, but the divergence suggests that existing commitments continued while investors became more selective about the next round of projects.
India still secured some large announcements. UNCTAD listed Alphabet’s proposed $14.5 billion data-centre project as the world’s largest announced greenfield investment of 2025. Google later said it would spend $15 billion over five years on its Andhra Pradesh AI data centre.
JK Srivastava Hynfra also signed an agreement for a green-ammonia project near Visakhapatnam with an expected investment of about ₹35,000 crore, or $4 billion. The project envisages one million tonnes of annual production and 3 GW of renewable capacity.
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These projects establish India’s pull in data infrastructure and clean energy. A manufacturing base, however, cannot depend on a few large announcements each year. It requires a wider group of medium-sized manufacturers willing to build plants across industrial clusters, source from Indian firms and export from India.
Investors compare India with Vietnam, Mexico and Indonesia before allocating a new plant. India’s market size gets it onto the shortlist. It does not settle the decision.
India FDI misses the technology investment surge
The composition of global investment has also changed. Capital moved towards data centres, semiconductors and AI infrastructure in 2025. UNCTAD estimates that announced data-centre investment exceeded $270 billion and accounted for more than one-fifth of global greenfield project values.
The largest gains went to economies and companies already embedded in the computing supply chain. The United States had the AI platforms and hyperscale infrastructure. Taiwan had advanced chip fabrication. South Korea had memory-chip capacity.
India entered this investment cycle while still building its semiconductor programme and domestic computing capacity. Its manufacturing reforms addressed several old constraints, but global capital had moved towards sectors where technology, skilled labour and an established supplier base counted as much as market size.
The China-plus-one shift was expected to bring a large share of multinational production to India. Some investment arrived, particularly in electronics. Diversification did not default to India.
Companies compared production costs, trade access, logistics, supplier depth and the stability of national and state-level rules. India’s domestic market remained an advantage. It was often insufficient to offset execution risks.
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India FDI changes with the measure
India’s FDI performance also depends on the statistic being used.
The Department for Promotion of Industry and Internal Trade reports foreign equity inflows. UNCTAD uses a broader measure that includes equity capital, reinvested earnings and intra-company debt, adjusted for disinvestment and other reverse transactions.
The Reserve Bank of India’s net FDI figure also deducts overseas investment by Indian companies. By this measure, India received net FDI of only $3.34 billion in 2025, against $2.83 billion in 2024.
Indian companies increased outward FDI by 47% to $35.66 billion. Their announced overseas greenfield projects rose 41% to $25.29 billion. Overseas expansion by Indian firms is not a policy failure. The figures show that their appetite to invest abroad is running alongside only a thin net addition of foreign capital at home.
India FDI needs durable rules
India needs foreign capital that builds factories, brings technology, draws local firms into supplier networks and supports exports. Acquisitions and intra-company flows add to FDI totals, but they do less to create a manufacturing system.
The country has removed several old constraints. GST replaced a patchwork of indirect taxes. The Insolvency and Bankruptcy Code created a single framework for resolving corporate insolvency. India Stack expanded digital identity and payment infrastructure.
The next constraints are harder. They sit in land administration, state approvals, courts, tax enforcement and trade policy. A central subsidy cannot compensate indefinitely for uncertainty in each of these areas.
India’s 2025 FDI recovery is genuine. The fall in greenfield announcements prevents the ranking from carrying more weight than it should. Until new factories arrive in larger numbers, $38.89 billion remains an improvement in the FDI table rather than proof that India has become a global manufacturing hub.
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