Foreign Direct Investment (FDI)
Concepts and India's Policy Framework
Foreign Direct Investment refers to cross-border investment where an investor in one country acquires a lasting interest in — and significant degree of influence over — an enterprise in another country. Unlike portfolio investment (which is short-term and equity/bond-market driven), FDI involves long-term capital commitment and operational involvement. India's FDI policy is governed by the Foreign Exchange Management Act (FEMA), 1999, with the Department for Promotion of Industry and Internal Trade (DPIIT) as the nodal authority. India allows FDI through two routes: the Automatic Route (no prior government approval required) and the Government Route (prior approval needed). Sectors like defence, media, and telecommunications have specific FDI caps.
- India's FDI inflows FY25: approximately $81 billion (gross)
- FDI under Automatic Route: most manufacturing sectors including electronics and shipbuilding
- Government Route applies to: defence (above 74%), satellite establishment, print media
- Key investor source countries: Mauritius, Singapore, USA, Netherlands, Japan, UAE
● Tracked since February 20, 2026 · last seen April 27, 2026 · updates as the daily brief publishes