India’s manufacturing sector surged to a 14-month high in June, defying global trade headwinds and demonstrating robust domestic demand. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose to 58.4 in June from 57.6 in May, signaling sustained growth momentum in factory output, new orders, and employment.

According to HSBC Chief India Economist Pranjul Bhandari, “India’s manufacturing PMI reached a fourteen-month high of 58.4 in June. Robust end-demand fuelled expansions in output, new orders, and job creation.”

Key Highlights:

• PMI climbs to 58.4 in June, the highest since April 2024.

• Quarterly average PMI also rises to 58.1 in Q2 FY26 from 57.4 in Q1.

• Export orders grow at the 3rd fastest pace since March 2005.

• Job creation hits a new high, indicating improved business confidence.

• Input cost inflation eases, giving manufacturers better pricing control.

Global Demand, Especially from the US, Fuels Growth

The surge in factory activity came despite ongoing external pressures such as rising US tariffs for the third consecutive month. Export demand remained a bright spot, with firms reporting increased orders from the United States and other major global markets.

“The rate of expansion in new export orders was the third highest since data collection began in 2005,” HSBC reported.

Employment and Pricing Trends Improve

Stronger demand translated into record-high job creation in June. Meanwhile, manufacturers gained more control over pricing, as input cost inflation dropped to a four-month low. This allowed companies to pass on some costs to consumers without major disruptions.

Industrial Output Tells a Contrasting Story

While PMI data signals optimism, the Index of Industrial Production (IIP) paints a less rosy picture. Industrial output grew by just 1.2% in May, the slowest pace in nine months. The slowdown was largely due to heavy monsoon rains disrupting mining and power generation.

• Capital goods and construction sectors showed resilience.

• Consumer durables and non-durables – key demand indicators – saw contraction, suggesting subdued consumer sentiment.

Outlook: Optimistic but Cautious

Despite the strong PMI numbers, uncertainties over inflation, global competition, and shifting consumer preferences are keeping businesses cautious.

“The outlook for Indian manufacturing remained positive in June, though concerns around pricing, demand shifts, and competition weighed on sentiment,” HSBC added.

What It Means for the Economy

With these mixed signals, analysts expect India’s GDP growth in Q1 FY26 to moderate, especially in comparison to the 7.4% expansion recorded in Q4 FY25.

Still, the resilience in manufacturing, especially exports and job creation, provides a cushion to India’s broader economic trajectory.

Source: MoneyControl

New regulations aim to make mutual funds easier to understand, more transparent, and accessible across India

India’s mutual fund landscape is set for a major transformation.

The Securities and Exchange Board of India (SEBI) has announced a complete review of mutual fund regulations to make them simpler, more transparent, and aligned with the needs of today’s investors and the evolving financial ecosystem.

At the 17th Mutual Fund Summit hosted by the Indian Chamber of Commerce (ICC), SEBI Executive Director Manoj Kumar said:

“We are reviewing the entire mutual fund regulatory framework to enhance ease of doing business for all stakeholders, including the regulator.”

Why This Matters

India’s mutual fund industry has grown rapidly, crossing ₹72 lakh crore in assets under management (AUM). Monthly SIP (Systematic Investment Plan) inflows now touch ₹28,000 crore. But despite this, only 5 crore Indians out of 140 crore are investing in mutual funds.

SEBI’s new approach aims to change that.

By simplifying rules, introducing more investor-friendly products, and expanding financial education, SEBI is preparing the ground for the next wave of mutual fund growth.

What’s Changing? Key Highlights from SEBI’s New Vision

• Simplified Mutual Fund Regulations

SEBI plans to shorten and simplify the existing mutual fund rulebook, which is currently one of the lengthiest in the financial sector. The goal is to make compliance easier for fund houses and understanding simpler for investors.

• New Draft Rules Coming Soon

SEBI will release draft regulations for public feedback before finalising them. These changes are expected to reduce complexity, improve transparency, and enhance investor protection.

• Introduction of SIFs – Strategic Investment Funds

To offer more choice to mid-sized investors, SEBI has approved a new product category—SIFs—with ticket sizes between ₹10 lakh and ₹50 lakh. These will be managed by mutual funds known for strong governance and risk management.

• Faster Approvals for PMS and AIFs

SEBI is streamlining the registration process for Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs) to make market participation easier and faster.

• Better Scheme Categorisation

SEBI is working on making mutual fund categories more intuitive and “true to label,” to help investors understand what they’re buying and avoid confusion or mis-selling.

•  Transparency in Mid & Small-Cap Funds

SEBI reaffirmed its disclosure-based regulation approach, especially around stress testing mid- and small-cap funds. The focus remains on keeping investors well-informed without overburdening fund houses.

Reaching the Next 100 Million Investors

Kumar also highlighted SEBI’s focus on expanding mutual fund access in Eastern India, especially in West Bengal and the Northeast, where awareness and adoption remain low.

He called on the industry to maintain high standards and avoid practices that trigger regulatory crackdowns:

“Our goal is not to disrupt but to allow business to thrive.”

AMFI Echoes SEBI’s Vision: From Savers to Wealth Creators

V N Chalasani, CEO of AMFI (Association of Mutual Funds in India), emphasized the need to move beyond just financial inclusion to true financial well-being.

While the industry has grown significantly since 2017—thanks to SEBI’s investor education campaigns—mutual fund AUM still represents only 20% of India’s GDP, far below the global average of 65%.

AMFI’s Action Plan:

• Financial literacy programs in schools and universities

• Partnering with India Post to expand mutual fund distribution

• Launching simple, innovative products for middle-income investors

• Focusing on Tier 3 and Tier 4 cities for deeper reach

“Every Indian can evolve from a saver to an investor—and ultimately a wealth creator,” said Chalasani, calling for stronger collaboration among regulators, fund houses, and educators.

Final Word

SEBI’s move to reform mutual fund regulations marks a crucial turning point for the industry. With a focus on simplicity, investor trust, and ease of doing business, the regulator is setting the stage for inclusive and sustainable growth in India’s capital markets.

Industry experts urge RBI to raise cap as forex reserves hit nearly $700 billion

India’s mutual fund industry has once again called for an increase in the overseas investment limit, urging regulatory authorities to reconsider the current cap of $7 billion for industry-wide investments in foreign securities.

At present, the Reserve Bank of India (RBI) allows a maximum of $1 billion per mutual fund house, and an additional $1 billion for investments in overseas exchange-traded funds (ETFs). However, these limits were breached in 2022 and have not been revised since, causing a roadblock for mutual funds looking to diversify globally.

Rising SIP Inflows Fuel the Demand

Speaking at the Moneycontrol Mutual Fund Summit 2025, Kalpen Parekh, MD & CEO of DSP Mutual Fund, emphasized the importance of international diversification for investors.

“The global space is useful for investor outcomes, but right now the limits are shut,” said Parekh, highlighting the constraint fund houses face.

He also noted that with the increasing inflows via Systematic Investment Plans (SIPs), a raised overseas limit would act as a pressure buffer, helping fund managers deploy capital more efficiently.

Strong Forex Reserves Make a Case for Relaxation

Industry insiders believe that increasing the limit should not be an issue, considering the RBI’s robust forex reserves of $698.8 billion as per the latest data.

Despite repeated representations to both SEBI and the RBI, the limits have remained unchanged, restricting the ability of asset management companies (AMCs) to launch new international schemes or invest globally through existing funds.

Global Exposure Remains Limited

Currently, only 22 mutual fund schemes in India have partial exposure to global equities. Due to the cap, new fund offers (NFOs) with overseas investment mandates remain inactive in terms of global allocation, missing out on valuable diversification benefits for investors.

Global investments help Indian investors hedge against domestic volatility and offer exposure to international tech giants, commodity-linked stocks, and emerging themes across geographies. But due to regulatory constraints, mutual funds are unable to fully tap into this opportunity.

Industry Seeks Policy Action

With continued strong SIP momentum and investor interest in diversified portfolios, the mutual fund industry is now renewing its appeal to the RBI and SEBI to raise the overseas investment cap- enabling better asset allocation, improved returns, and increased global participation.

Source: Moneycontrol

India’s gross direct tax collection for FY2025-26 rose by 4.86% to ₹5.45 lakh crore as of June 19, according to the latest data released by the Income Tax Department. The rise reflects steady momentum in tax inflows, though net collections declined marginally due to a sharp surge in refunds.

Key Highlights:

• Gross Direct Tax Collection (FY26 so far): ₹5,45,207 crore
  (Up from ₹5,19,936 crore during the same period last year)

• Net Direct Tax Collection: ₹4,58,822 crore
  (Down 1.39% from ₹4,65,275 crore in FY25)

• Tax Refunds: ₹86,385 crore
  (Up 58.04% from ₹54,661 crore last year)

Advance Tax Collections Show Modest Growth

India’s advance tax receipts saw a healthy growth of 3.87%, reaching ₹1,55,533 crore as of June 19.

• Corporate Advance Tax: ₹1,21,604 crore (Up 5.86%)

• Non-Corporate Advance Tax: ₹33,928 crore (Down 2.68%)

The advance tax numbers indicate continued strength in corporate profitability, while the slight drop in non-corporate contributions may reflect early-year variability.

Refund Surge Driven by Faster Processing

The sharp 58% increase in tax refunds suggests an improvement in taxpayer services and faster refund processing. This has led to a marginal 1.39% decline in net direct tax collection, despite overall growth in gross receipts.

New e-Pay Tax Feature Rolled Out

In a move to simplify compliance, the Income Tax Department launched the ‘e-Pay Tax’ facility on its official portal. This feature aims to make tax payment more convenient and accessible for taxpayers.

Major Tax Code Overhaul in Progress

As part of a long-term tax reform agenda, the Union Budget of July 2024 proposed a complete revamp of the Income-tax Act, 1961. The goal is to make the law simpler, clearer, and less litigation-prone.

• The draft Income Tax Bill, 2025 is currently under review by a Select Committee.

• Aimed at enhancing transparency, the new law promises tax relief for individuals earning up to ₹12 lakh annually.

• The revised structure proposes a rebate of ₹60,000, effectively eliminating tax liability for a large segment of middle-income taxpayers.

The new Income Tax Bill is expected to be tabled in Parliament during the upcoming Monsoon Session, Finance Minister Nirmala Sitharaman confirmed in March.

India’s direct tax performance in early FY26 reflects stable economic activity, strong corporate earnings, and an efficient tax administration system. With broader structural reforms on the horizon, including a new Income Tax Code, the country is paving the way for a more transparent and growth-oriented tax ecosystem.

Source: Economic Times

India’s steel imports are expected to drop by 50% in FY26 compared to the previous year, thanks to the recently imposed safeguard duty, according to Steel Secretary Sandeep Poundrik. In an interview with CNBC-TV18 on June 17, he stated that import levels in April and May 2025 were already significantly lower than the same period last year.

The 12% provisional safeguard duty, which came into effect on April 21 for 200 days, aims to protect domestic manufacturers from a surge in cheap steel imports, especially from China. The duty applies specifically to flat-rolled products of non-alloy and certain alloy steels.

DGTR Final Recommendation Expected by August

The Directorate General of Trade Remedies (DGTR) is currently investigating the matter and will give its final recommendation by August 2025. Secretary Poundrik clarified that no decision has been taken yet on increasing the duty beyond the current 12%.

“As of now, I would not like to hazard a guess if the safeguard duty will be higher or lower. The government will decide based on DGTR’s findings and industry feedback,” he said.

Centre May Consider Doubling Duty Amid China Dumping Concerns

Amid reports that the Centre might double the duty to 24%, concerns have mounted over potential dumping of Chinese steel into India. Many Chinese exports are now being redirected to Middle Eastern and African markets, reducing some pressure on Southeast Asia and India, according to Tata Steel MD T.V. Narendran.

Domestic Industry Welcomes Safeguard Measures

The Indian steel industry has welcomed the provisional duty. Several stakeholders believe the move has provided a buffer to local producers during a time of heightened global steel supply. However, vigilance remains high due to China’s large export volumes during March and April 2025.

Strong Steel Demand Outlook: Per Capita Consumption to Rise

India continues to emerge as a global leader in steel demand. According to Secretary Poundrik, the country’s per capita steel consumption, currently at 104 kg, is expected to rise to 155–160 kg by 2030, and further by 2035.

“India is the only major economy recording double-digit growth in steel consumption, with nearly 12% growth over the past three years, compared to 0.5–1% globally,” he noted.

Crackdown on Misuse of BIS Certification

The government has also identified misuse of the BIS (Bureau of Indian Standards) certification process. Some importers with BIS licences were found violating norms, leading to action including revocation of permissions.

“We are plugging all loopholes. Only BIS-compliant companies can import steel into India now,” said Poundrik.

With robust domestic demand, regulatory tightening, and proactive safeguards, India is reinforcing its position as a resilient and growing steel market amid a turbulent global landscape. The upcoming DGTR ruling in August will be crucial in shaping the future of steel imports and domestic pricing.

Source: Moneycontrol

According to CRISIL Ratings, total investments in India’s renewable energy, roads, and real estate sectors are projected to reach a massive ₹17.5 trillion across FY26 and FY27. This represents an annual growth rate of 15%, compared to ₹13.3 trillion invested during the previous two fiscal years.

Released at CRISIL’s 3rd Annual Infrastructure Summit, the report highlights how India’s infrastructure landscape is evolving with focused capital allocation, rising investor interest, and strong credit resilience, even amidst global and domestic challenges.

Strong Growth Across Three Core Infrastructure Sectors

Renewable Energy:

India’s renewable sector is rapidly transitioning to storage-backed and hybrid energy projects to ensure consistent, round-the-clock power supply. Of the 75 GW capacity expected to be added across FY26 and FY27, hybrid projects will account for 37%, up sharply from 14% over the previous two fiscals.

• Total Capex in Transmission: ₹1 trillion over FY26 and FY27 — double the previous years

• Key risk: Transmission delays due to land acquisition, approvals, or component shortages

Roads Sector:

The road infrastructure segment remains a high-impact growth driver for the Indian economy. However, future progress hinges on accelerated asset monetization and increased private capital participation.

• NHAI’s monetization share to grow to 18% in FY26–27, from 14% in the prior two years

• Total monetizable road assets: ₹3.5–₹4 trillion

• Key risk: Past challenges with Toll-Operate-Transfer (TOT) bundling — 35% remained unawarded

Real Estate:

India’s residential and commercial real estate markets continue to expand steadily. After recovering strongly post-pandemic, the residential sector is now entering a normalization phase, while commercial leasing demand remains on the rise.

• Residential revenue growth: 10–12% CAGR across FY26 and FY27

• Commercial leasing to grow 7–9% annually, crossing 50 million sq. ft. by FY27

• Key risk: Rising inventory levels due to excess launches; expected to rise to 3.1 years in FY26 from 2.7 in FY24

Infrastructure Investment Outlook Remains Resilient Despite Challenges

CRISIL cautions that each sector faces structural and external risks. These include:

• Transmission capacity delays in renewables

• Valuation mismatches or approval delays in road monetization

• Inventory buildup and rising debt among property developers

• Geopolitical risks that may affect capital inflows into infrastructure

Despite this, the overall credit profiles of developers in these sectors remain healthy.

According to CRISIL, ₹2.1 trillion in equity capital has already been deployed across these sectors over the last two years. This has helped companies deleverage and maintain strong cash flows.

• Debt service coverage ratio (DSCR) for toll roads is expected to remain healthy at 1.5–1.6x

• Total outside liabilities to tangible net worth for road developers is projected at 0.6–0.7x

  Source: Livemint
  

India is on track to become a US$ 1 trillion export economy by FY26, according to Union Minister of Commerce and Industry, Mr. Piyush Goyal. Driven by robust growth in services exports and resilient global demand, India achieved its highest-ever total exports of ₹70.55 lakh crore (US$ 825 billion) in FY25.

Despite multiple global disruptions- including the Russia-Ukraine war, Israel–Hamas conflict, and the Red Sea crisis- India’s economy has shown remarkable strength, continuing its upward export trajectory.

Key Highlights:

• FY25 Total Exports: ₹70.55 lakh crore (US$ 825 billion), the highest ever recorded

• FY24 Total Exports: ₹66.53 lakh crore (US$ 778 billion)

• FY26 Target: Over ₹85.52 lakh crore (US$ 1 trillion), a projected growth of 21%

• Merchandise Exports Forecast FY26: ₹44.89 – ₹45.75 lakh crore (US$ 525–535 billion), up 12%

• Services Exports Forecast FY26: ₹39.76 – ₹40.62 lakh crore (US$ 465–475 billion), up 20%

Strong Resilience Amid Global Disruptions

Union Minister of Commerce & Industry, Mr. Piyush Goyal, stated that India’s robust export growth in FY25 reflects economic resilience in the face of international challenges such as the Russia-Ukraine war, Israel–Hamas conflict, and Red Sea shipping disruptions. He expressed confidence that India will not only maintain this momentum but will also exceed its FY25 performance in FY26.

Services Sector: The Growth Engine

India’s services exports hit a record ₹33.05 lakh crore (US$ 386.5 billion) in FY25. Key contributors included:

• Telecommunications and IT services

• Transport and travel services

• Financial and professional services

Global companies increasingly view India as a preferred sourcing destination, fueling further services export growth.

Policy Updates and Economic Outlook

The Department for Promotion of Industry and Internal Trade (DPIIT) continues discussions on upcoming national e-commerce and retail trade policies, engaging with stakeholders like the National Traders’ Welfare Board to streamline domestic and international trade frameworks.

Meanwhile, the World Bank has retained India’s GDP growth forecast at 6.3% for FY26, positioning India as a standout performer amid global economic uncertainty. Global GDP is forecast to grow at just 2.3%, its weakest pace in nearly two decades outside of recessions.

Why This Matters for India’s Export Sector

With strategic policy reforms, a booming services sector, and resilient supply chains, India is poised to become a US$ 1 trillion export economy. For businesses and investors, this presents a major opportunity to align with India’s global trade expansion across sectors including technology, logistics, finance, and e-commerce.

Source: IBEF

The mutual fund industry in India continues to witness strong retail participation, as Systematic Investment Plan (SIP) inflows surged to a record high of ₹26,688 crore in May 2025, according to data released by the Association of Mutual Funds in India (AMFI). This marks a marginal rise from ₹26,632 crore recorded in April, signaling consistent long-term commitment by investors despite market volatility.

Key Highlights:

• SIP Inflows Rise: SIP contributions increased by 0.21% month-on-month to ₹26,688 crore in May.

• SIP AUM Growth: The SIP assets under management (AUM) rose to ₹14.61 lakh crore in May from ₹13.90 lakh crore in April.

• SIP Share in Total AUM: SIP AUM now accounts for 20.24% of the mutual fund industry’s total AUM, up from 19.9% in April.

• SIP Account Growth: The number of active SIP accounts climbed to 8.56 crore, while the total SIP accounts reached 9.06 crore, reflecting growing investor participation.

• Lower SIP Stoppage Ratio: For the first time in months, the SIP stoppage ratio improved, with 59 lakh new SIP accounts opened and 43 lakh closed or matured in May.

Mutual Fund Industry Performance – May 2025

Despite a 21.66% decline in net inflows into open-ended equity mutual funds, totaling ₹19,013 crore—marking a one-year low—the mutual fund industry continued to expand.

• Overall Mutual Fund Net Inflows: ₹29,108 crore in May

• Total Industry AUM: Crossed a record ₹72.20 lakh crore, up from ₹69.99 lakh crore in April

Expert Commentary

“The underlying trend remains robust. Strong SIP inflows, which we have witnessed in recent times, are likely to continue. This reflects the growing maturity and long-term equity commitment among Indian investors,” said Himanshu Srivastava, Associate Director – Manager Research, Morningstar India.
He further noted that the dip in equity fund inflows appears cyclical, and a recovery is expected as macroeconomic indicators remain favorable.

Why This Matters for Investors

The continued rise in SIP inflows amid equity market corrections highlights the growing financial discipline among Indian retail investors. Systematic Investment Plans (SIPs) remain a powerful tool for wealth creation, especially in volatile markets.

With mutual fund AUM reaching all-time highs and SIP contributions setting new records, India’s mutual fund industry is positioned strongly for sustained growth through FY2025.

Source: Moneycontrol

India’s tax revenues continue to showcase resilience, as the gross Goods and Services Tax (GST) collections for May 2025 rose to ₹2.01 lakh crore, marking a significant 16.4% year-on-year increase from ₹1.72 lakh crore in May 2024. This robust uptick follows the historic ₹2.37 lakh crore collected in April 2025, indicating sustained tax buoyancy despite ongoing global economic uncertainties.

According to the Ministry of Finance, this is the second consecutive month with GST collections crossing the ₹2 lakh crore mark—highlighting strengthening economic activity and improved compliance across the board.

Detailed GST Revenue Break-Up – May 2025

• Central GST (CGST): ₹35,434 crore

• State GST (SGST): ₹43,902 crore

• Integrated GST (IGST): ₹1.09 lakh crore

  • Includes ₹39,879 crore collected on import of goods

• GST Compensation Cess: ₹12,879 crore

• Total GST Refunds: ₹27,210 crore (decline of 4% YoY)

Imports Drive the Growth in Collections

The revenue spike was mainly driven by a 25.2% increase in GST collected from imports, while GST from domestic transactions saw a healthy growth of 13.7%, signaling a broad-based expansion.

Vivek Jalan, Partner at Tax Connect Advisory Services LLP, emphasized this trend:

“It is very clear that this month’s growth in GST revenue is import-driven rather than domestic consumption-led. Even year-to-date trends reflect this imbalance, and the lack of a corresponding increase in export refunds further confirms the dominance of import growth.”

This trend suggests that global supply chain shifts, along with sustained demand for imported goods, are playing a larger role in India’s tax landscape this fiscal year.

Expert Views: What the Numbers Really Indicate

According to Saurabh Agarwal, Tax Partner at EY:

“Last month’s higher GST numbers were partly influenced by year-end B2B sales to meet targets. However, the current month’s figures suggest some caution in consumer demand, likely influenced by inflation moderation and international uncertainty.”

Yet, Agarwal remains optimistic, pointing out that continued upticks in GST collections across states and union territories—including Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Tripura, Meghalaya, Assam, Lakshadweep, and Andaman & Nicobar Islands—signal wider economic development and increased formalization of the economy.

GST Growth as a Policy Enabler

Notably, Pratik Jain, Partner at Price Waterhouse & Co LLP, sees this revenue consistency as a strong macroeconomic signal:

“If this momentum in GST revenue sustains over the next few months, it may give the government enough cushion to finally initiate long-pending GST rate rationalization, which has already been extensively studied and planned.”

Rate rationalization could help simplify India’s complex tax structure, reduce classification disputes, and improve overall tax compliance, boosting India’s image as a business-friendly destination.

Geopolitical Context and Consumption Patterns

Interestingly, this surge in GST revenue comes amid ongoing global geopolitical tensions, including trade policy uncertainties and supply disruptions. While these factors typically depress trade and investment flows, India appears to be holding its ground through resilient imports, infrastructure push, and formalization of small businesses.

At the same time, a slight drop in GST refunds (down 4% YoY) indicates a shift in input-output balances. Analysts caution that if the trend of higher imports without matching export growth continues, India must stay vigilant about its current account and ensure policy support for domestic industries.

Outlook: Can GST Stay Above ₹2 Lakh Crore?

Looking ahead, experts project similar revenue figures in June 2025, with minor fluctuations expected due to international price volatility and festive consumption patterns. As monsoon forecasts remain positive and inflation stays within the RBI’s comfort zone, domestic demand could regain strength by the second quarter of FY26.

Moreover, the consistent high GST collections are seen as a positive sign for India’s fiscal health, providing room for higher capital expenditure without breaching fiscal deficit targets.

Source: Economic Times

India’s foreign direct investment (FDI) trajectory over the last decade has undergone a dramatic transformation, reflecting a deeper global trust in the country’s economic and policy direction. Since the launch of flagship initiatives such as Make in India, Digital India, and the Production Linked Incentive (PLI) scheme, India has not only attracted record-breaking foreign capital but also repositioned itself as a strategic hub in the global economy.

FDI Surge: From Potential to Performance

To begin with, between 2004 and 2014, India received approximately $208 billion in FDI equity inflows. However, post-2014, the landscape changed significantly. Over $500 billion has flowed into India, with a staggering $300 billion arriving between 2019 and 2024 alone. Moreover, despite geopolitical and economic headwinds, India secured $40.67 billion in FDI during the April–December 2024 period. Clearly, this is not just steady growth- it represents a fundamental shift in global investor confidence.

Sectoral Momentum: Digital & Manufacturing Lead the Way

Furthermore, India’s digital economy has emerged as a clear winner. Since 2014, the computer software and hardware segment has attracted $95 billion in FDI. In addition, the services sector- including finance, IT, R&D, and consultancy- has garnered $77 billion. This clearly shows that India has evolved from being a back-office destination to a global innovation and technology hub.

But more importantly, the resurgence of manufacturing has rewritten the narrative. For instance, in 2014, India imported nearly 80% of its smartphones. Today, that number has flipped, largely due to the success of the PLI scheme. Global giants like Apple- via Foxconn and Wistron- are now assembling iPhones in India. As a result, smartphone exports have surged to $21 billion, up from negligible levels just a decade ago.

In parallel, sectors such as auto, construction equipment, and pharmaceuticals are experiencing robust FDI inflows. This indicates a deliberate transition from a service-dominated model to a more balanced and broad-based growth framework. Notably, every dollar of FDI is not just capital- it is a catalyst for job creation, MSME development, supply chain strengthening, and technology transfer.

Green Growth: India as a Clean-Tech Magnet

Equally important is India’s growing role in the global clean energy transition. Foreign investors are increasingly aligning with India’s sustainability goals. From renewable energy to electric mobility, India is fast becoming a magnet for green capital. Companies like Tesla, Hyundai, ReNew Power, and Adani Green are either expanding or deepening their presence. In essence, foreign capital is now enabling not only economic growth but also future-oriented, sustainable development.

FDI Across the Map: Rise of Emerging States

Traditionally, Maharashtra, Tamil Nadu, Gujarat, and Karnataka have led in attracting FDI. However, more recently, states like Uttar Pradesh, Telangana, and Haryana have begun gaining traction. Thanks to focused policy reforms, improved infrastructure, and strategic investment promotion, these states are emerging as competitive destinations in their own right.

India in the Global FDI Race: China Plus One Advantage

Meanwhile, on the global stage, India has smartly capitalized on the China Plus One strategy. As companies look to diversify their supply chains away from China, India stands out due to its political stability, economic scale, skilled workforce, and rising digital infrastructure.

In this context, trade agreements such as the India-UAE CEPA, India-Australia ECTA, and the ongoing FTA negotiations with the UK, EU, and EFTA nations are critical enablers. These pacts are opening high-value sectors like green hydrogen, fintech, and EV manufacturing to new cross-border investment flows.

Admittedly, India faces stiff competition from nations like Vietnam and Indonesia. Nevertheless, its unmatched combination of market size, reform momentum, institutional stability, and skilled talent continues to set it apart. Moreover, as India deepens reforms in land acquisition, judicial efficiency, and infrastructure, its capacity to anchor global value chains will only strengthen.

Conclusion: The New Global Investment Playbook

In conclusion, India’s FDI performance since 2014 is not just a testament to capital inflow it reflects a global endorsement of India’s structural transformation. The convergence of scale, reform, digital infrastructure, and manufacturing ambition has turned India from a promising market into a priority market.

As global supply chains realign and new trade corridors emerge, India is no longer pitching its potential- it is executing with scale and precision. Looking ahead, the next decade will not be about catching up- it will be about leading from the front.

Source: Economic Times