India’s Next FDI Phase Should Deepen Integration with Economic, Industrial Ecosystem: Assocham

The next phase of India's foreign direct investment (FDI) policy should focus not only on attracting investment but also on creating an environment in which investment can be sustained, expanded and more deeply integrated with India's economic and industrial ecosystem, an Assocham study said on Monday. India’s foreign direct investment landscape has changed significantly over the past 25 years.

According to official DPIIT/RBI data, total FDI inflows rose from $4 billion in FY2000-01 to around $95 billion in FY2025-26, while FDI equity inflows rose from $2 billion to $59 billion over the same period. Between FY2000-01 and FY2025-26, India received a cumulative total of $1.16 trillion in FDI and $791 billion in FDI equity. The trend reflects India's growing integration with the global economy and the gradual expansion and liberalisation of its FDI regime, said the study.

“India has built a strong foundation for attracting Foreign Direct Investment. The next phase should focus on making it easier for investors to establish, operate and expand businesses in India, while strengthening the wider economic benefits of such investments,” said Nirmal Minda, President, Assocham. The Assocham working paper highlights that FDI has become an important component of India's development across services, manufacturing and emerging sectors.

Services and computer software and hardware account for nearly one-third of cumulative FDI equity inflows, while significant investment has also gone into automobiles, pharmaceuticals, chemicals, infrastructure, electronics and renewable energy, said Minda. The paper emphasises that FDI supports development by bringing capital, technology, global market access, and international business linkages.

“Its wider impact depends on how much investment creates domestic value addition, employment, exports, technology and linkages with Indian enterprises,” said Dr SP Sharma, Chief Economist, Assocham. The paper has recommended strengthening investor aftercare, improving the single-window approval process, reducing land costs and improving land availability, logistics, utilities, compliance and finance, promoting technology and R&D-oriented investment, developing ready-to-invest infrastructure, and improving coordination between Central and State governments.

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