Foreign Direct Investment (FDI) inflows into India rose 44 percent year-on-year to USD 39 billion in 2025, reinforcing the country's position as one of the world's leading investment destinations, according to the United Nations Conference on Trade and Development (UNCTAD) in its 2026 World Investment Report.

The report noted that FDI inflows into South Asia increased from USD 34 billion to USD 46 billion during the year, with India accounting for the majority of the growth. Globally, FDI flows increased 6 percent to USD 1.6 trillion, supported by an 11 percent rise in developed economies and a 2 percent increase in developing economies.

UNCTAD said India's investment performance continued to benefit from an active policy framework aimed at expanding investment beyond the services sector and strengthening advanced manufacturing. Government initiatives such as the Production Linked Incentive (PLI) schemes, Make in India, Start-up India and the National Industrial Corridor Development Programme, along with reforms including the National Single Window System and India Industrial Land Bank, have improved the country's investment environment.

The report highlighted that institutional measures such as Project Development Cells and the Project Monitoring Group have also helped accelerate project approvals and implementation, supporting manufacturing investments and India's integration into global value chains.

Despite the rise in overall FDI inflows, UNCTAD observed signs of a more cautious investment cycle. The total value of announced greenfield investments declined to about USD 74 billion in 2025 from more than USD 111 billion in 2024, while the number of announced projects fell marginally.

The slowdown was primarily concentrated in manufacturing, where announced investment values dropped to USD 27 billion from around USD 65 billion a year earlier. The decline was particularly visible in capital-intensive industries, although project numbers remained relatively stable, indicating smaller investment sizes rather than a sharp fall in investor interest.

Electronics manufacturing remained one of the largest investment segments despite moderating from record levels, while services continued to demonstrate resilience. Information and communication technology emerged as the largest sector for greenfield investment during 2025, reflecting continued expansion in digital infrastructure and technology-related services. Financial services also recorded renewed investment activity.

The report cautioned that trade policy uncertainty, geopolitical tensions, supply chain realignment and weaker global investment sentiment could weigh on manufacturing and infrastructure investments going forward. However, it noted that India's policy focus on advanced manufacturing, infrastructure development and digital economy sectors continues to support its long-term investment outlook.