Foreign Direct Investment (FDI) in India saw a significant 73% increase last year, bringing in a total of $47 billion, as reported by UNCTAD. This surge was primarily driven by substantial investments in services like finance, IT, and R&D, along with manufacturing, supported by policies aimed at integrating India into global supply chains.
India’s FDI growth rate was among the highest globally, with investments in data centers totaling $7 billion in the first three quarters of the year. Notably, Google, Microsoft, and Amazon made substantial investments in AI, cloud infrastructure, and data centers in India, signaling a dynamic sector poised for growth.
Globally, FDI increased by 14% to $1.6 trillion last year, with data centers playing a significant role in shaping the FDI landscape. The report highlighted that demand for AI infrastructure and digital networks was a key driver, with announced investments in this area exceeding $270 billion.
Semiconductors also showed high growth, with newly announced projects in this sector increasing by 35%. However, sectors like textiles, electronics, and machinery, exposed to tariff risks, experienced a decline in project numbers.
Developed economies received the majority of FDI flows, with a collective increase of 43% to $728 billion. In contrast, developing economies, except for India, saw a 2% decline in FDI to an estimated $877 billion. China experienced a third consecutive year of declining FDI, falling by 8% to $107.5 billion.
Overall, investor sentiment remained weak, with international mergers and acquisitions falling by 10%. International project finance also declined for the fourth consecutive year, both in value and the number of deals, emphasizing the need to focus on real investment revival.
