India Records $94.53 Bn FDI in FY26: What Businesses Should Know

Overview: India recorded US$ 94.53 billion in gross FDI inflows in FY 2025–26, the highest annual level recorded so far. Cumulative FDI inflows from FY 2014–15 to FY 2025–26 reached USD 843 billion. In Q1 FY 2026–27, FDI equity inflows rose 6% to USD 19.81 billion, with Japan emerging as the largest source and services recording the highest sectoral inflows.

India’s latest Foreign Direct Investment figures show continued foreign investment across sectors and states. For businesses planning to bring foreign capital into India, however, strong investment activity does not change the need to comply with the applicable FDI policy, FEMA rules, reporting requirements and sector-specific conditions

India Records Strong FDI Inflows in FY26 and Q1 FY27

India recorded US$ 94.53 billion in gross FDI inflows during FY 2025-26, the highest annual figure recorded so far. Cumulative FDI inflows from FY 2014-15 to FY 2025-26 reached approximately US$ 843 billion.

The latest quarterly data also showed continued activity. FDI equity inflows rose 6% year-on-year to US$ 19.81 billion in April-June 2026, compared with US$ 18.62 billion in the same period of FY 2025-26. Total FDI, including equity inflows, reinvested earnings and other capital, stood at around US$ 30.65 billion during the quarter.

Japan was the largest source of FDI equity inflows during Q1 FY 2026-27, contributing around US$ 5.71 billion, followed by Singapore and Mauritius. The services sector led sectoral inflows at approximately US$ 7.04 billion, followed by computer software and hardware at US$ 2.84 billion.

At the state level, Tamil Nadu recorded the highest FDI inflow at around US$ 5.95 billion, followed by Maharashtra at US$ 4.22 billion.

What Does Record FDI Mean for Businesses?

Higher FDI inflows indicate continued foreign investment activity, but individual transactions still have to satisfy the conditions applicable to the particular investment.

An Indian company receiving foreign investment should first determine:

• whether the sector permits foreign investment;
• the applicable FDI cap;
• whether the investment can come through the Automatic Route or requires Government approval;
• whether any ownership or beneficial ownership conditions apply;
• whether valuation and pricing requirements are met; and
• which FEMA reporting requirements and timelines apply.

These checks are important before accepting foreign capital, issuing shares or transferring securities to or from a non-resident.

FDI and FEMA Compliance: Key Requirements

These requirements operate alongside the Foreign Exchange Management Act, 1999 (FEMA), the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 and applicable sector-specific regulations.

Why FDI Structuring Matters

The availability of the Automatic Route does not mean that every foreign investment can be received without a compliance review. The investment must still satisfy the applicable sectoral cap, entry conditions, pricing rules, ownership requirements and reporting obligations.

For foreign investors and Indian businesses, getting the structure right before the investment is made can help avoid complications at the approval, reporting or post-investment stage.

SetIndiaBiz Support

SetIndiaBiz helps Indian businesses and foreign investors with FDI structuring, FEMA compliance, company incorporation, regulatory documentation and post-investment compliance. Support can include assessing the appropriate investment route, sectoral conditions, ownership requirements, valuation, approvals and applicable FEMA reporting requirements.

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