How India Can Seize Foreign Investment Opportunities

India finds itself in an intensifying global competition for foreign investment to create good jobs, upskill workers, infuse technology, and fuel growth.

- Atman M Trivedi

This high-stakes race is brimming with ambitious entrants, and the complacent risk being left behind.

Fortunately, India's appeal as an investment destination is growing, according to some metrics. Last December, India's commerce ministry reported that total foreign direct investment (FDI) flows climbed to $1 trillion since April 2000. Gross FDI rose to $55.6 billion last April-November, a 17.9% year-on-year increase over the same period. Bellwethers such as Apple are investing more in India's future. The global share of made-in-India iPhones is expected to surge from 15% to 25% by 2027, according to JPMorgan and Bank of America.

Yet, look more closely, and the FDI picture is not all roses. Gross FDI inflows have experienced only modest growth over the last decade, while net FDI inflows reportedly hit a 12-year low in April-October 2024. What does this mean? Global businesses are not investing enough in India. And, when they do, they seem to be pulling profits out of the country, rather than reinvesting these. Per the World Bank, FDI as a share of India's GDP fell from 2.4% in 2020 to 0.8% in 2023.