India is experiencing a significant transformation in foreign direct investment patterns, with record-breaking inflows targeting future-shaping industries that could fortify the economy against global headwinds. According to a comprehensive study by the McKinsey Global Institute, the country has emerged as the top emerging-market destination for greenfield FDI—cross-border investments that create entirely new production capacity rather than acquiring existing assets.
Record-Breaking Investment Inflows
From 2022 through the first five months of 2025, India's greenfield FDI inflow announcements have averaged $83 billion per year, representing a substantial 24% increase compared to the 2015-2019 period. What makes this surge particularly noteworthy is the strategic direction of these investments, with nearly 80% destined for advanced manufacturing, communications and software, and resource-related sectors.
This marks a dramatic shift from traditional investment patterns that previously favored textiles and basic product manufacturing. The analysis examined approximately 200,000 announced greenfield FDI deals over the past decade, revealing that multinational corporations are making multibillion-dollar bets on industries that will define tomorrow's global economy.
Future-Focused Sector Concentration
The investment distribution reveals a clear strategic focus. Almost half of the $83 billion annual FDI since 2022 has been concentrated in just two high-potential sectors: AI infrastructure and advanced manufacturing. The latter includes semiconductor production, electric vehicle assembly, and battery manufacturing facilities.
Substantial projects are already materializing across these domains. American technology giants are announcing large-scale data center projects on Indian soil, while significant semiconductor investments are in various stages of development. Simultaneously, Japanese and South Korean automotive companies are establishing new projects focused on EV assembly and battery production.
These developments could significantly enhance India's integration into advanced Asian value chains, facilitating increased flows of components between Japan, Korea, and India. More importantly, investments in these knowledge-intensive areas enable the transfer of specialized expertise to Indian industry while empowering home-grown technical talent.
Geopolitical Realignment and Economic Resilience
The study highlights how geopolitical considerations are increasingly influencing investment decisions. India's FDI sources now present a well-balanced mix, with the United States, advanced Asian economies, and Europe each contributing approximately 30% of total investments.
This represents a notable shift from pre-pandemic patterns. Chinese investment in India has plummeted by 86% between 2015-2019 and 2022-2025, while announced investments from advanced Asian economies have grown by about 75% since 2022 compared to the 2015-19 baseline.
The research also notes that Indian multinationals are expanding their global footprint, with announced outbound greenfield FDI rising 64% from $16 billion per year in 2015-2019 to $26 billion per year in 2022-2025. Resource-related deals in the Middle East and North Africa region have shown the most significant growth.
Pathway to Sustainable Economic Growth
While FDI inflows themselves constitute only a small fraction of India's domestic economy, their spillover effects can generate substantial long-term benefits. The study identifies three critical conditions for maximizing these spillover effects: integration into global value chains through upstream or downstream linkages, adequate human capital and infrastructure to absorb incoming technology and knowledge, and stimulation of domestic investment that enhances sustainable economic competitiveness.
The authors emphasize that AI infrastructure and advanced manufacturing align perfectly with India's identified growth engines. Recent MGI research had previously identified 18 future arenas—including AI software and services, semiconductors, EVs, and batteries—that could generate up to $2 trillion in revenue for India by 2030.
Despite recent challenges, including US tariffs on Indian exports adding uncertainty, the new wave of future-focused FDI provides India with strategic flexibility to navigate shifting geopolitical dynamics while pursuing accelerated economic growth. The diversified investment sources and concentration in high-growth sectors position India favorably amid global economic uncertainties.
