Services Sector Leads FDI Surge To USD 81 Bn In FY25

(MENAFN- KNN India) New Delhi, May 28 (KNN) India's Foreign Direct Investment inflows have demonstrated robust growth, reaching USD 81.04 billion in the financial year 2024-25, representing a 14 per cent increase from USD 71.28 billion recorded in the previous fiscal year.

This growth trajectory reflects the sustained impact of the government's investor-friendly FDI policy framework, which permits 100 per cent foreign investment through automatic approval across most sectors.

The government's comprehensive FDI policy undergoes continuous review to maintain India's competitive positioning as an investment destination.

This approach has yielded substantial results, with FDI inflows more than doubling from USD 36.05 billion in FY 2013-14 to the current provisional figures for FY 2024-25.

Sectoral analysis reveals that services emerged as the primary recipient of FDI equity investments in FY 2024-25, capturing 19 per cent of total inflows.

The sector experienced significant growth with investments rising 40.77 per cent to USD 9.35 billion from USD 6.64 billion in the preceding year.

Computer software and hardware followed as the second-largest recipient with 16 per cent of total inflows, while trading accounted for 8 per cent of FDI equity investments.

Manufacturing FDI has gained considerable momentum, establishing India as an emerging manufacturing hub. The sector recorded 18 per cent growth in FY 2024-25, with investments reaching USD 19.04 billion compared to USD 16.12 billion in FY 2023-24.

Geographic distribution of investments shows Maharashtra maintaining its position as the leading destination state, accounting for 39 per cent of total FDI equity inflows in FY 2024-25.

Karnataka secured the second position with 13 per cent of investments, followed by Delhi with 12 per cent.

Among source countries, Singapore retained its leading position with a 30 per cent share of investments, while Mauritius contributed 17 per cent and the United States accounted for 11 per cent of total FDI inflows.

Long-term data indicates India's strengthening position in global investment flows.

Over the eleven-year period from 2014 to 2025, the country attracted FDI worth USD 748.78 billion, marking a 143 per cent increase compared to the previous eleven years (2003-14), which recorded USD 308.38 billion in inflows.

This recent period represents nearly 70 per cent of the total USD 1,072.36 billion in FDI received over the past 25 years.

The expansion of India's global investor base is evident in the increase of source countries from 89 in FY 2013-14 to 112 in FY 2024-25, highlighting the country's broadening international appeal as an investment destination.

Regulatory reforms have played a crucial role in facilitating this growth. Between 2014 and 2019, the government implemented significant policy changes including increased FDI limits in defence, insurance, and pension sectors, alongside liberalised policies for construction, civil aviation, and single brand retail trading.

The reform momentum continued from 2019 to 2024 with the introduction of 100 per cent FDI under automatic approval for coal mining, contract manufacturing, and insurance intermediaries.

The 2025 Union Budget has proposed further liberalisation by increasing the FDI limit from 74 per cent to 100 per cent for companies that invest their entire premium within India.

These developments underscore India's consolidation as a preferred global investment destination, supported by proactive policy frameworks, an evolving business ecosystem, and growing international confidence in the country's economic stability and growth prospects.

(KNN Bureau)

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