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Source — Source: BL ///Category — GS Paper 3 ///Published — 2026-01-10 ///Exam — Both Prelims and Mains ///Tags — Rapid Fire CA, Quick Facts For Prelims, GS Paper - 3 ///Source — Source: BL ///Category — GS Paper 3 ///Published — 2026-01-10 ///Exam — Both Prelims and Mains ///Tags — Rapid Fire CA, Quick Facts For Prelims, GS Paper - 3 ///

Source: BL · GS Paper 3

FDI Trends in India

India's FDI inflows rose to USD 35.2 billion in the first half of FY26, an 18% increase over the same period last year, driven largely by the IT sector. Singapore emerged as the largest investor, while Maharashtra continued to attract the biggest share of investments, underscoring the importance of sectoral and regional policies for the Indian economy.

2026-01-10

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Source: BL

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Key Facts and Data Points

FDI Inflows (H1 FY26): USD 35.2 billion, +18% over H1 FY25 (USD 29.8 billion).
Cumulative FDI (Apr 2000 – Sep 2025): USD 1.12 trillion.
Top Investing Nations:
Singapore – USD 12 billion (34% of total)
United States – USD 6.6 billion
Mauritius – USD 3.5 billion
State‑wise Distribution:
Maharashtra – ~30% share (largest recipient)
Karnataka – USD 9.4 billion (2nd)
Tamil Nadu – USD 3.6 billion (3rd)
Gujarat – 6.4% share (decline)
Leading Sectors (cumulative equity inflows):
Services – 16%
Computer Software & Hardware – 16%
Trading – 6%
Telecommunications – 5%
Automobiles – 5%
Policy Enablers:
Raising FDI cap in insurance to 100%
Implementation of GST
Development of Special Economic Zones (SEZs)

Background and Context

The Department for Promotion of Industry and Internal Trade (DPIIT) monitors and reports FDI trends.
Post‑2020, India has pursued a liberalisation agenda to attract foreign capital, aligning with the Make in India and Digital India initiatives.
The IT sector’s surge reflects global demand for software services and India's competitive advantage in talent.

Significance for India / Governance / Policy

Economic Growth: Higher FDI contributes to capital formation, technology transfer, and job creation, supporting the 5% GDP growth target.
Sectoral Development: Concentration in services and IT underscores the shift towards a knowledge‑based economy.
Regional Balance: Maharashtra’s dominance highlights the need for policy focus on lagging states to ensure balanced development.
Policy Impact: Liberal reforms (e.g., insurance FDI cap) demonstrate how regulatory changes can unlock investment.

Related Constitutional / Legal Provisions

Article 246 – Distribution of legislative powers; FDI policy falls under the Union List (Commerce and Industries).
Foreign Exchange Management Act (FEMA), 1999 – Governs foreign investment regulations.
Companies Act, 2013 – Provides the framework for foreign equity participation.

Implications for UPSC

Understanding FDI trends aids in answering Prelims questions on current economic data and Mains essay/GS‑3 questions on liberalisation, investment climate, and regional development.

Source: Department for Promotion of Industry and Internal Trade (DPIIT), data as of September 2025.