India Strengthens FDI Ecosystem with Policy Reforms, Digital Ease & Global Agreements

In recent years, India’s FDI framework has undergone transformative liberalisation across sectors including Defence, Insurance, Telecom, Space, and Petroleum & Natural Gas.

The Government of India continues to strengthen its Foreign Direct Investment (FDI) ecosystem through progressive policy reforms, regulatory simplification, and global economic partnerships. According to a written reply by Minister of State for Commerce & Industry, Shri Jitin Prasada, the government reviews FDI policies regularly to ensure India remains one of the most attractive destinations for global investors.

The Minister clarified that the Government does not set fixed FDI inflow targets, as FDI depends on market-driven business decisions and global economic factors such as macroeconomic stability, infrastructure availability, market size, and investor confidence.

To boost investor sentiment and ease business operations, the government has implemented wide-ranging reforms aimed at enhancing transparency, minimizing compliance burdens, and promoting investment-friendly procedures.

Key initiatives such as the Business Reforms Action Plan (BRAP) 2024, Logistics Ease Across Different States (LEADS) Report 2024, and the Regulatory Compliance Burden (RCB) Reduction Programme—which has eliminated over 42,000 compliances under 670 legislations—were highlighted as major enablers of investor confidence. The Jan Vishwas Act 2023 further strengthened the reforms by decriminalizing 183 legal provisions across 42 central acts.

In recent years, India’s FDI framework has undergone transformative liberalisation across sectors including Defence, Insurance, Telecom, Space, and Petroleum & Natural Gas. Earlier reforms between 2014 and 2019 opened key industries such as civil aviation, construction, and retail, while reforms between 2019 and 2024 expanded automatic-route permissions in coal mining, contract manufacturing, and financial services.

Further support for foreign and domestic investors came through landmark tax reforms. The abolition of the Angel Tax in 2024 and reduced corporate tax rates for foreign entities have boosted startup and enterprise-level investment. Recently introduced GST reforms in September 2025 simplified rates for key sectors such as textiles, food processing, education, automobiles, footwear, logistics, toys, and healthcare—reducing compliance, improving cost efficiency, and supporting youth-led entrepreneurial growth.

India’s international economic engagements have also expanded. The country currently holds 15 Free Trade Agreements (FTAs) and 6 Preferential Trade Agreements (PTAs). The 2024 Trade and Economic Partnership Agreement with the European Free Trade Association (EFTA) marked a milestone by securing the world's first unilateral commitment of $100 billion investment and 1 million direct jobs over 15 years.

Negotiations are underway for additional FTAs with regions including the EU, Oman, New Zealand, Chile, and Peru, reaffirming India’s role as a key global trade partner.

The government also highlighted substantial improvements in sector-specific FDI inflows. Since policy liberalisation, Defence, Telecommunications, and Insurance sectors have recorded strong growth—showing a 196.83% rise in FDI in Defence, 11.68% in Telecom, and 199.20% in Insurance.

FDI performance indicators demonstrate rising investor confidence. India recorded its highest inflow in three years with $80.62 billion in FY 2024–25. The first half of FY 2025–26 saw a record inflow of $50.36 billion, representing a 16% increase year-on-year.

With a majority of sectors now open up to 100% FDI under the automatic route, India continues to position itself as a global investment hub driven by innovation, streamlined governance, and expanding international partnerships.