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17 Jan 2026

India's FDI Inflows Stagnate Amid Global Economic Shifts

India's annual FDI inflows have shown minimal growth with a CAGR of around 2%. While gross inflows improved, net FDI drastically declined due to increased profit repatriations. In FY25, the services sector led in FDI equity, but emerging sectors like semiconductors are gaining traction. Global FDI has also weakened amid geopolitical uncertainties.

India's FDI Inflows Stagnate Amid Global Economic Shifts

Stagnant India FDI Inflows Amid Global Shifts

India's foreign direct investment (FDI) inflows have experienced minimal growth over the past five years, according to CareEdge Ratings. With a mere 2% compound annual growth rate (CAGR), these inflows oscillated between USD 70 and 85 billion between FY20 and FY25.

Sharp Decline in Net FDI Flows

Net FDI flows plummeted drastically from USD 44 billion in FY20 to just USD 1 billion in FY25.
Gross inflows have shown improvement, yet increased profit repatriation and outbound investments have significantly curtailed net FDI inflows.

Competitive Return on India's Inward FDI

CareEdge's analysis highlights that India's inward FDI still yields a competitive return of 7.3%, surpassing many developed and emerging economies.

FDI Distribution Across Sectors

The services sector attracted the most FDI equity in FY25, accounting for 19% of inflows.
The computer software and hardware sector followed closely at 16%, with the trading and non-conventional energy sectors each taking 8%.
Promising sectors such as semiconductors and electric vehicles are increasingly attracting FDI.

Global FDI Trends

Globally, FDI flows lag behind GDP growth, with Europe's share declining while China's outward FDI share rises.