Manufacturing sector becomes the first choice of foreign investors
The sound of the strength of the Indian economy has once again sounded across the world. A recent report by the Reserve Bank of India (RBI) has confirmed that India still remains a ‘hotspot’ for foreign investors. The flow of foreign investment in the country has further strengthened during the financial year 2024-25. But amidst this bright picture, a very interesting and noteworthy thing has come to light. More than one-third of the total foreign investment that India receives, i.e. Rs 33 out of 100, is coming from only two countries – America and Singapore.
This interim report of RBI’s ‘Survey of Foreign Liabilities and Assets’ (FLA) 2024-25, released on Wednesday, offers a deep glimpse of our economy’s foreign relations. It shows which countries have the most faith in India’s growth story and where they are investing their money.
America again showed its dominance
These latest RBI figures show that the total Foreign Direct Investment (FDI) figure in India has increased to a huge level of Rs 68.75 lakh crore. This is a huge jump compared to Rs 61.88 lakh crore of the last financial year (2023-24). On market value basis, this shows a strong growth of 11.1 percent.
America has the largest share (20 percent) in this huge capital. America is continuously placing its biggest bet on India’s economic story, which is a symbol of the deepening economic relations between the two countries.
Singapore (14.3 percent) is firmly at second position in this list. If only these two countries are combined, then they have about 34.3 percent share of India’s total FDI. This is a huge concentration that shows how dependent India’s foreign investment is on a few key partners.
After these two giants, countries like Mauritius (13.3 percent), Britain (11.2 percent) and Netherlands (9 percent) also stand strongly in the list of major investors. The survey is based on responses from 45,702 Indian companies, of which 41,517 entities either had FDI in their accounts or had invested abroad, making it highly reliable.
Manufacturing sector becomes investors’ favorite
It is also important to know where this foreign money worth lakhs of crores is going? Is it just coming into the software or services sector, as is generally believed? According to the RBI report, the manufacturing sector has received the largest share of the total foreign investment coming into India. This is 48.4 percent (at market value) of total FDI equity, which is almost half. This is a very big and important figure.
This simply means that foreign investors are expressing confidence in India’s industrial capacity, its factories and production capacity. This is a major success for the government’s ‘Make in India’ initiative. When investment in manufacturing increases, it is expected that it will create new and permanent employment in the country, transfer of modern technology and India will move towards becoming a major production hub for the world. The service sector stood second in this matter.