NEW DELHI: The United States has emerged as the second largest source of foreign direct investment (FDI) into India during the last financial year, overtaking Mauritius. Equity investments from the US more than doubled to over $11 billion in 2025-26 as companies chose to invest directly into India instead of routing funds through a tax-friendly jurisdiction as they had done in the past.
Top Sources of FDI
Singapore remained the top source, registering a healthy increase. Japan saw a hefty increase thanks to large cheques in the financial services space. Commerce and industry minister Piyush Goyal had recently said that American companies had committed investments of around $60 billion in recent months.
Impact of Tax Treaty Amendments
Since the amendment of the tax treaty with Mauritius, Singapore has emerged as the most preferred route for investments into India. During the last financial year, it accounted for around one-third of equity inflows. But tax havens are not being ignored by investors. Cayman Islands saw investments to India soar from $371 million in 2024-25 to $2.1 billion last year, although officials suggested it may be on account of a few investments.
Sectoral Shift in FDI
There is also a change in the sectoral allocation of FDI. Last year saw computer hardware and software emerge as the top draw, overtaking services. That may partly have to do with the rush of investments in data centres. Food processing was another sector that saw an over five-fold jump in equity investments, with sea transport or shipping and related activities seeing a 30 times increase of nearly $2 billion in 2024-25.
Government Initiatives
Goyal said the government was working on several proposals to promote investments. "We are continuously addressing challenges related to increasing self-reliance, particularly in areas where our supply chains are critically dependent on certain geographies," he said.
