India’s FDI Journey Hits $1 Trillion – First half of FY 2024-25 sees a 26% increase to $42.1 billion

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Introduction

India has hit an important milestone – it has received $1 trillion in foreign investments since April 2000. Recently, this growth has been especially strong, with investment money increasing by 26% to $42.1 billion in just six months of this year.

More companies from around the world are choosing to invest in India because the country has made it easier to do business there. The government has created helpful programs like “Make in India” and introduced better tax systems (GST). Companies are also attracted by India’s lower worker costs.

These foreign investments have helped India grow by bringing in money, new technology, and creating jobs for people. Big international companies continue to see India as a good place to invest their money.

Between April 2014 and September 2024, India received $709.84 billion in foreign investments. This is really impressive because it makes up nearly 69% of all the money invested in India over the past 24 years.

In other words, more than two-thirds of all foreign investment in India happened in just the last ten years. This shows that India has become much more attractive to international companies and investors in recent years, making it an important player in the world economy.

Factors Driving the Change

Here’s why India has been so successful in attracting foreign investment:

Competitiveness and Innovation: India is getting better at competing globally. In 2024, it moved up to 40th place in world rankings, up from 43rd in 2021. The country is also becoming more innovative – it’s now ranked 40th for innovation, much better than its 81st place in 2015.

Global Investment Standing: India is now the third most popular country for new business projects from foreign companies, with 1,008 new projects announced. The country has also seen a big increase (64%) in international funding for large projects, making it the second most popular country for these deals.

Improved Business Environment: India has made it much simpler for companies to work there. In 2014, India was ranked 142nd for ease of doing business. By 2020, it had jumped to 63rd place. This big improvement happened because the government made rules simpler and cut down on paperwork, making foreign companies more confident about investing in India.

Policy Reforms: The Indian government has created business-friendly policies to attract more foreign investment. Now, foreign companies can fully own their businesses in most sectors without needing special permission, with only a few sensitive areas having restrictions. To make things even easier, in 2024 the government improved tax rules by removing the ‘angel tax’ for startups and reducing tax rates for foreign companies. These changes have made it simpler and more appealing for foreign businesses to invest and operate in India.

Other Notable Developments

Conclusion

India has achieved a major success in attracting foreign investment, bringing in $42.1 billion in just six months of this year and reaching a total of $1 trillion since 2000. This success comes from making India more competitive globally, encouraging new ideas and innovation, and making it easier for businesses to operate.

The government has helped by creating programs like “Make in India” and changing rules to allow foreign companies to invest in more areas, including the space sector. These changes show that India is actively working to grow its economy. With all these improvements, India is in a good position to become an even more important player in the world economy and continue its growth.

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