India plans coordinated FDI drive, eyes global investors in these key sectors

Mint

7 hours ago

New Delhi: The Centre is working on a plan to create a more industry-friendly ecosystem for foreign direct investment (FDI), by identifying key sectors and reaching out to global companies for investments, according to two senior government officials aware of the matter.
The plan, which will also draw on existing production-linked incentive (PLI) schemes and infrastructure development programs, involves close coordination between the Centre and states, the officials said on condition of anonymity.
They added that the idea is to align states' efforts with national priorities, address local policy bottlenecks, and strengthen the country's overall manufacturing and supply chain ecosystem as the country attempts to boost annual FDI inflows to more than $100 billion over the next few years from $80-billion levels currently.
So, what's the plan?
As a first step, the Unionministry of commerce and industryis coordinating with Invest India, the country's top investment promotion and facilitation agency, to identify key value chains and sectors that require targeted intervention.
'We are mapping the sectors and value chains where India can play a larger role and then approaching global companies operating in those areas to bring in investment," the first official cited above said.
'We are working at both the state and central levels to provide all possible facilitation required by investors," the second official said.
According to these officials, the Centre is focusing on sectors such as electronics system design and manufacturing (ESDM), chemicals, toys, and footwear—particularly non-leather footwear—where leading companies have shown strong interest in joining India's supply chain.
In the toy sector especially, several global companies have begun discussions to set up manufacturing bases in India, drawn by government incentives and the expanding domestic market, the second person said, without naming the companies planning to invest in these sectors.
The states in focus include Maharashtra, Tamil Nadu, Andhra Pradesh, Gujarat, Karnataka, Uttar Pradesh, Delhi, Madhya Pradesh, and Odisha, among others.
Queries emailed to theministry of commerce and industry, whichis spearheading this initiative, remained unanswered till press time.
Vivek Singhal, chief executive officer (CEO) of Bidso, a B2B manufacturer of outdoor toys, said that the influx of FDI can lead to a doubling of manufacturing units, adoption of advanced production technologies, and a shift from import dependence to domestic output, eventually making India a net exporter.
'India now manufactures 88% of the toys sold domestically and has a unique opportunity to become both a manufacturing powerhouse and a champion of its rich legacy in traditional toys," said Singhal. 'We are in touch with brands that lead design and innovation such as Buffalo Games and Chillafish to move their procurement to India."
Here's more details
The department for promotion of industry and internal trade (DPIIT), which comes under the Union commerce ministry, has tasked Invest India with identifying global investors, working with states to make necessary changes in the policy framework to provide a better investment ecosystem, and organising roadshows in different countries to woo investors.
The DPIIT is coordinating with other line ministries such as ministry of electronics and information technology (MeitY), food processing, textiles, and heavy industries. To ease visas for investors, the DPIIT is working with the ministries of home affairs and external affairs.
The Jan Vishwas Bill 2.0, which aims to decriminalise several Acts, has also been introduced to encourage investors by improving the overall ecosystem. The Bill is listed for presentation in the ongoing monsoon session and is likely to be tabled during the current session of Parliament, as per the officials cited above.
Adding momentum to existing initiatives
To be sure, the Centre is already offering financial support to attract investment and build more resilient supply chains within sectors–an example being the PLI scheme for electronic components administered by the MeitY.
The second official cited above pointed out that apart from the procedural framework laid out under Press Note 3, which regulates FDI from countries sharing land borders with India, there are minimal regulatory hurdles for foreign money to come into the country.
Between 2019 and 2024, the government undertook further liberalisation measures, including allowing 100% FDI under the automatic route in coal mining, contract manufacturing, and insurance intermediaries. In the 2025 Union Budget, it proposed raising the FDI limit for insurance companies from 74% to 100%, provided they invest their entire premium income within the country.
India's FDI numbers
India attracted foreign direct investment (FDI) worth $81.04 billion in FY25, marking a 14% jump from the previous year, data from the commerce ministry showed. The services sector emerged as the top recipient of FDI equity inflows, accounting for 19% of the total, with investments rising nearly 41% to $9.35 billion in FY25 from $6.64 billion a year earlier.
This was followed by the computer software and hardware sector, which attracted 16% of inflows, and the trading sector, with an 8% share. India's cumulative FDI inflow over the last eleven years (2014-25) has reached $748.78 billion, a 143% rise over the preceding eleven-year period (2003-14), which saw $308.38 billion. The number of countries investing in India also rose to 112 in FY25, compared with 89 in FY14.
FDI inflows into India peaked at $84.83 billion in the fiscal year 2021-22, according to data shared by minister of state for finance Pankaj Chaudhary in the Lok Sabha on 10 March. Thereafter, the numbers declined to $71.35 billion in FY23 and $71.27 billion in FY24, following uncertainty about a potential global recession, economic crises triggered by geopolitical conflicts and rising global protectionist measures.