FDI Surges 44% to $39 Billion as Nations Race for Manufacturing Dominance in Global Value Chains

FDI Surges 44% to $39 Billion as Nations Race for Manufacturing Dominance in Global Value Chains​

India Cemented as Prime Investment Destination Amid Cautious Global Trends​

India has significantly strengthened its standing as a premier investment destination, with Foreign Direct Investment (FDI) inflows surging by 44 per cent to reach USD 39 billion in 2025. This strong performance was highlighted by the UNCTAD's World Investment Report, which analyzed global capital flows across major economies.

The report revealed that while India saw massive growth, the broader global FDI landscape remained fragile and cautious. Globally, FDI rose by 6 per cent to USD 1.6 trillion in 2025. This contrasts with a more uncertain international environment marked by geopolitical tensions and trade policy volatility.

Policy Push Drives Surge in South Asian Inflows​

A substantial boost came from the South Asia region, where FDI inflows increased strongly, moving from USD 34 billion to USD 46 billion. The UNCTAD report specifically attributed this growth to robust investment directed towards India.

India's ascent is credited to an active policy agenda designed to expand its investment base beyond traditional services sectors. These initiatives include the Production-Linked Incentive schemes, Make in India, and Start-up India.

The government has also focused on creating a conducive environment for foreign investors through reforms. Institutional mechanisms like the National Single Window System and the India Industrial Land Bank are working to facilitate project approvals and implementation.

Greenfield Investment Shows Manufacturing Slowdown​

Despite the robust rise in total FDI inflows, the trend in announced greenfield investment experienced a noticeable slowdown in 2025. The total value of announced greenfield investment declined from over USD 111 billion in 2024 to approximately USD 74 billion in 2025.

This deceleration was most pronounced in the manufacturing sector. Announced investment values in manufacturing fell sharply, dropping from around USD 65 billion in 2024 to just USD 27 billion in 2025.

While the overall number of projects only saw a marginal decline, the concentration of slowdown in capital-intensive sectors suggests that project sizes were shrinking rather than commitments diminishing entirely.

Services and High-Tech Sectors Display Resilience​

Investment in services remained resilient in India, maintaining stability while exceeding the level of manufacturing investment. Information and communication technologies (ICT) emerged as the largest sector in 2025, reflecting growing expansion in digital infrastructure activities.

Financial services also recorded renewed activity, aligning with the national policy focus on advanced manufacturing and deeper integration into Global Value Chains (GVCs).

The report noted that manufacturers are concentrating their efforts towards high-technology segments such as electronics, automotive, and machinery. Electronics-related manufacturing remained one of the largest sectors by value and project number, despite year-on-year declines.

Global Headwinds Threaten Future Manufacturing Commitments​

While India continues to push aggressively toward advanced manufacturing, the path is met with significant global hurdles. The UNCTAD report cautioned that tariff uncertainty, supply chain realignments, and weaker worldwide investment sentiment are actively affecting the scale of new commitments.

Digital infrastructure investment benefited greatly from international players. Investment in hyperscale data centers by major US firms like Amazon, Google, and Microsoft showed particular activity across India, Malaysia, and Indonesia.

The UNCTAD report affirmed that these focused efforts—backed by reforms like making the FDI regime more open—are essential for reinforcing India’s role as a critical component of the global manufacturing ecosystem.