Foreign Direct Investment (FDI) in India has shown a strong revival, marking an important phase for the country’s economic landscape. Latest government data for April to September of FY 2025–26 (H1 FY26) shows that FDI rose 18% to $35.18 Billion, compared with $29.79 Billion during the same period last year. This rise points to renewed confidence among global investors and highlights India’s growing position in the world economy.
One of the most notable developments is the sharp rise in investments coming from the United States. Inflows from the US more than doubled, jumping from $2.57 Billion in H1 FY25 to $6.62 Billion in H1 FY26. This shift indicates that American companies and investors see India as a major destination for long-term investment.
The overall 18% rise is supported by robust inflows during the second quarter. Between June and September 2025 (Q2 FY26), FDI equity inflows grew more than 21% to nearly $16.5 Billion. When reinvested earnings and other capital components are added, total FDI into India in the first half of FY26 reached around $50 Billion, up from nearly $42.3 Billion during the same period in FY25.
This means that foreign companies are not just investing fresh capital but also reinvesting their earnings already generated within India. Such reinvestment often signals long-term commitment.
Several sectors continue to draw strong attention. Computer software and hardware remained the top contributor, attracting around $9 Billion. The services sector, including business services, financial services and IT-enabled services, received nearly $5 Billion. Non-conventional energy—mainly solar, wind and green hydrogen-related projects—gained close to $2 Billion, reflecting growing global interest in India’s clean energy push. Other areas such as automobiles, chemicals, trading and construction also witnessed steady inflows.
On the state-wise front, Maharashtra continued to lead with inflows of around $10.57 Billion, followed by Karnataka with $9.4 Billion. Tamil Nadu, Gujarat, Delhi, Telangana and Haryana remain key centres, showing how India’s established industrial and technology hubs continue to attract large foreign investments.
The doubling of US inflows to $6.62 Billion is one of the most significant developments in recent years. Several important factors explain this shift.
A major reason is the global move towards “China+1” diversification. Many companies that have long relied on China for manufacturing are looking for alternative locations. India, with its large market, improving infrastructure and growing skilled workforce, is becoming a preferred choice. Sectors such as electronics, semiconductors, automobiles, electric vehicles and renewable energy are seeing deeper US participation.
Changes in India’s policies have also played a role. Over the past few years, the government has expanded automatic routes for foreign investment in sectors like coal mining, insurance intermediaries, defence manufacturing and contract manufacturing. Such steps have reduced the need for extra approvals and simplified processes, encouraging more foreign investors to enter.
Ongoing growth in both services and manufacturing also supports the rise in FDI. Official data for FY 2024–25 shows total FDI inflows of $81.04 Billion. Manufacturing FDI grew 18% to $19.04 Billion, while services remained the top contributor. Many US companies are expanding in areas such as cloud computing, data centres, electric vehicle supply chains, digital platforms and research and development.
Strategic ties between India and the United States are strengthening, especially in defence, critical technology, semiconductors and clean energy. Economic partnerships often follow geopolitical cooperation, and the latest numbers reflect this deepening relationship.
Despite the rise in American inflows, Singapore remains the largest source of FDI for India, contributing around $11.94 Billion in H1 FY26. However, the US is rapidly becoming one of India’s most significant investment partners.
The latest improvement comes after a period of decline. In FY 2023–24, FDI inflows fell by around 3.5% to $44.42 Billion because of uncertainties in the global economy, high interest rates in major economies and corrections in the valuation of Indian start-ups.
Even during this slowdown, India improved its global position. It rose to 15th place in the UNCTAD global FDI rankings for 2024, up from 16th the previous year. This shows that India performed better than many similar economies despite global challenges.
There are still cautionary signs. The rupee recently fell past 90 per dollar, accompanied by foreign portfolio outflows. In some months, net FDI turned negative because of large exits by private equity and venture capital investors. This makes it important to track both gross and net FDI figures. Gross inflows may rise, but large withdrawals can affect the net numbers.
The latest data suggests that India is moving towards a deeper and more stable relationship with global capital. The rise in investment is not limited to one region or one sector. High-value industries such as advanced manufacturing, renewables and digital services are attracting more capital. States like Maharashtra, Karnataka, Tamil Nadu and Gujarat are strengthening their positions as global value-chain hubs.
The increasing share of US investments adds an important strategic component. With supply chains shifting, technology partnerships expanding and clean energy gaining momentum, the US-India economic relationship is likely to deepen further.
For this shift to become long-term, several factors will be important—stable policies, quick infrastructure execution, clear rules for digital and data-driven sectors and progress in labour and land reforms at the state level. Global conditions will also play a role. High interest rates or geopolitical uncertainty could slow down investments, while the push for green energy and diversified supply chains will continue to support India.
The 18% rise in FDI inflows, the doubling of US investments and the steady growth of high-value sectors show that India is entering a new phase of foreign investment momentum. The latest numbers point toward more than just a short-lived rise. They suggest a strategic shift, with multinational companies viewing India not only as a market but as a global production and innovation base.
If current trends continue, India could see a sustained wave of foreign investment over the coming years, reshaping its economic landscape and strengthening its role in global supply chains.