Focus on FDI receipts by India from 2014 – 2024 & India's role in the Global Supply Chain in the future

Time of India

5 hours ago

Dr. Prashant Prabhakar Deshpande has post-graduated in Economics with a Gold Medal in 1976 and was awarded a Ph.D in Social Sciences from Nagpur University in 2007.
Introduction
FDI has long been hailed as a vital driver of economic growth in both developed and developing countries presenting opportunities for increased productivity, transfer of technology, job creation, and enhanced global competitiveness.
India's FDI inflows in 2024-25 have reportedly reached $81.04 billion, a 14% increase from the previous year led by the services sector followed by the computer software and the Hardware.
FDI inflows have seen a steady rise from $36.05 billion in FY 2013-14 to $81.04 billion (provisional) in FY 2024-25 amounting to 124.80 % increase with13.69 % increase in FY 2024-25 amounting to $81.04 billion from $71.28 billion reported in FY 2023-24.
While the services sector emerged as the top recipient of FDI equity in FY 2024–25 attracting 19 % of total inflows it was followed by:
Computer software and hardware (16 %), and;
Trading (8 %).
FDI into the Services sector rose by 40.81 % to $9.35 billion from $6.64 billion in the previous year, with a strong surge in the FDI in the Manufacturing sector growing by 18.11 % in FY 2024–25 reaching $19.04 billion compared to $16.12 billion in FY 2023–24.
Transformation in India's foreign investment scenario post-2014
India's Foreign Investment scenario has experienced transformation since 2014 with FDI equity inflows having been noticed surging, especially between 2019 and 2024. Government reforms like Make in India and Digital India are credited with this increased investor confidence along with the digital economy and the manufacturing sectors having experienced significant growth, it has been observed.
It has been pointed out, India has changed post-2014 from a hesitant reformer to a strategic magnet for investment resulting in the country attracting a significant amount of foreign capital over the past decade.
While from 2004 to 2014 India received FDI equity inflows to the tune of $208 billion, between 2014 to 2024 it received over $500 billion FDI equity inflows, with $300 billion having been received between 2019 and 2024.
It is noteworthy that despite global slowdowns, India received during the April–December 2024 period alone $40.67 billion FDI, demonstrating a monumental shift in global confidence in the ability of India.
According to observers, this is not a mere coincidence. They point out that government's relentless focus on Minimum Government, Maximum Governance, and its flagship reforms, Make in India, Startup India, Digital India, GST rollout and the National Logistics Policy have not only improved ease of doing business but have enhanced India's appeal to the foreign investors, enabling India to climb in the World Bank Rank from over 140 to 63 in 2019.
Embarking on Transformative Reforms
In the Regulatory domain, the Indian government undertook transformative reforms across multiple sectors to liberalise FDI norms.
Thus:
Between 2014 and 2019:
Increased FDI caps in Defence, Insurance & Pension sectors and;
Liberalized policies for Construction, Civil Aviation & Single Brand Retail Trading.
From 2019 to 2024:
Allowed 100 per cent FDI under the automatic route in Coal mining, Contract manufacturing & Insurance intermediaries.
In 2025, the Union Budget proposed:
Increasing the FDI limit from 74% to 100% for companies investing their entire premium within India.
The Sectoral performance in attracting FDI
Computer software and hardware attracted $95 billion in FDI since 2014.
Services ranging from finance and IT to R&D and consultancy attracted $77 billion.
According to observers this demonstrates that India is no more just a back office, but rather, is a global innovation partner.
In 2014, 75–80% of India imported smartphones. Their exports being negligible a decade ago have now surged to $21 billion the Production Linked Incentive scheme having prompted global giants like Apple to assemble iPhones in India through Foxconn, the Taiwanese Multinational Electronics Contract Manufacturer and Wistron, an Electronics Manufacturer based in Taiwan.
In addition, FDI into manufacturing, auto, construction equipment, and pharmaceuticals demonstrates India's strategic shift from service-led to a balanced, broad-based growth.
Contribution by FDI
It is pointed out:
Every dollar of FDI received, does not only represent capital, but also leads to:
Job creation;
Supply chain expansion, and;
Transfer of technology.
FDI fuels the MSME ecosystem scaling 'zero defect, zero effect' practices in manufacturing lead to assure customers, reduce wastages, increase productivity, expand markets, apart from saving on energy, etc. lifting Tier 2 and Tier 3 cities into the investment spotlight.
In an appeal, PM Narendra Modi has also urged the industry, especially the MSMEs to manufacture goods with 'zero defects' and to ensure that the goods have 'zero effect' on the environment.
Foreign investors have also aligned with India's green ambitions. From renewable energy to electric mobility, foreign capital is now enabling not just growth, but sustainable & future-facing growth.
Epilogue
As companies diversify away from China under 'China+1', India has emerged as a stable, democratic, scalable alternative. The India-UAE CEPA (Comprehensive Economic Partnership Agreement between UAE & India, India-Australia ECTA (Australia-India Economic Cooperation and Trade Agreement, and FTAs with the UK, EU, and EFTA (European Free Trade Association) nations are opening new high-value channels like Green Hydrogen, EVs, Fintech, and beyond.
Although Vietnam and Indonesia are said to be the real competitors, India, according to observers, represents a unique mix of scale, stability, skills, and a massive domestic market. With reforms in land acquisition, judicial efficiency, and deepening infrastructure investment, India's ability to anchor global value chains according to them, will therefore only grow stronger over the period.
Since 2014, according to observers, India's FDI trajectory reflects more than just capital inflow but signals global endorsement of India's structural shift. The combination of scale, reform, digital depth, and manufacturing intent of India is hard to match according to them.
As such, as global supply chains realign, India stands out, not as an alternative, but as a priority according to them. The coming decade therefore would not be about catching up, but about leading by India according to them.
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Views expressed above are the author's own.