Foreign Direct Investment (FDI) under the government route saw a massive 277.6% year-on-year surge to $2.20 billion in 2024–25, with trends also indicating that foreign companies are increasingly allocating (more) resources toward acquiring existing shares.
The FDI for acquisition of existing shares which includes partial or full exits by existing domestic or foreign investors—has (cut this word: also) shown consistent growth. It rose to $13.1 billion in 2024–25, up from $12.0 billion in 2023–24, and significantly higher than $8.2 billion in 2022–23, according to official government data.
While most sectors of the economy are fully open to FDI under the automatic route, government approval is still required in specific sectors like defence, space, aviation, financial services, banking, and telecom under certain conditions.
In defence FDI beyond 74% have to come through government route, in air services FDI of more than 49% needs prior government approval, in private banking FDI beyond 49% and up to 74% has to be vetted by both the government and the Reserve Bank of India (RBI). In pharma FDI beyond 74% while investing in an existing company needs government nod.
In 2024–25, the services sector—including banking, insurance, and other financial services—emerged as the largest recipient of FDI, attracting $9.34 billion, or 18% of the total inflow.
The regulations also permit conversion of External Commercial Borrowings (ECBs) into equity through the approval route, which may also be reflected in the data.
Apart from sectoral restrictions, the companies based out of countries with whom India shares land borders all investments have to go through government approval route. Countries covered by this Press Note include Pakistan, China, Bangladesh, Nepal, Bhutan and Myanmar.
The FDI from the countries covered by Press Note 3 dealing with FDI from land border countries is miniscule. FDI from China was a mere $ 2.67 million while from Hong Kong – the special administrative region of China – it was just $ 81.29 million.
The biggest route of FDI remains an automatic route with $ 34.6 billion out of $ 50.0 billion coming this way. In 2023-24, $ 31.8 billion out of $ 44.4 billion while in 2022-23 $ 37.0 billion out of $ 46.0 billion came through the automatic route