Introduction
India has steadily evolved into one of the fastest-growing major economies, offering a vibrant and welcoming environment for investors from around the world. India’s economic momentum remains strong, underpinned by resilient domestic demand and sustained macroeconomic stability. In FY26, Real GDP (GDP at Constant Prices) is estimated to reach Rs. 3,23,12,034 crore (US$ 3.66 trillion), rising from Rs. 2,99,88,619 crore (US$ 3.55 trillion) in FY25, reflecting a robust growth of 7.7%. At current prices, Nominal GDP is estimated to reach Rs. 3,46,35,638 crore (US$ 3.92 trillion) in FY26, from Rs. 3,18,07,309 crore (US$ 3.76 trillion) in the previous year, registering a growth of 8.9%.
India’s investor base continued to expand, with the total number of demat accounts reaching 23.44 crore as of July 2026, comprising 18.83 crore CDSL accounts and 4.62 crore NSDL active client accounts. During July 2026, CDSL recorded 24.98 lakh new accounts, while NSDL added 6.68 lakh accounts, highlighting continued retail participation in the capital markets. The demat ecosystem also remained robust, with NSDL reporting 6,22,451 crore securities under demat custody as of July 31, 2026.
Market Activity
Real Gross Value Added (GVA) is estimated to grow by 7.9% to Rs. 294.91 lakh crore (US$ 3.34 trillion) in FY2025–26, compared with Rs. 273.36 lakh crore (US$ 3.23 trillion) in FY2024–25, reflecting sustained expansion in productive activity across sectors. Meanwhile, Nominal GVA is estimated to increase by 9.1% to Rs. 314.87 lakh crore (US$ 3.56 trillion) in FY 2025–26 from Rs. 288.54 lakh crore (US$ 3.41 trillion) in the previous year, indicating continued momentum supported by both output and price effects.
India’s PE/VC ecosystem recorded investments of Rs. 1.81 lakh crore (US$ 20.5 billion) across 604 deals in 1H2026. Growth investments emerged as the largest investment category at Rs. 61,862 crore (US$ 7.0 billion), followed by buyout investments at Rs. 47,722 crore (US$ 5.4 billion). Real estate, technology and financial services were the leading sectors, together accounting for nearly 50% of total PE/VC investments during the period.
India's FDI inflows have increased ~20 times from FY01 to FY26. According to the Department for Promotion of Industry and Internal Trade (DPIIT), India's cumulative FDI inflow stood at US$ 1.16 trillion between April 2000-March 2026, mainly due to the government's efforts to improve the ease of doing business and easing of FDI norms. The total FDI inflow into India in FY26 stood at Rs. 8,25,485 crore (US$ 94.52 billion) and FDI equity inflow for the same period stood at Rs. 5,16,936 crore (US$ 58.84 billion).
From April 2000-March 2026, India's service sector attracted the highest FDI equity inflow of 16.36% amounting to Rs. 8,52,631 crore (US$ 128.85 billion), followed by the computer software and hardware industry at 15.82%, amounting to Rs. 9.07.251 crore (US$ 124.64 billion), trading at 6.55% amounting to Rs. 3,69,756 crore (US$ 51.58 billion), automobile industry at 5.12% amounting to Rs. 2,70,230 crore (US$ 40.31 billion), and telecommunications at 5.10% amounting to Rs. 2,42,122 crore (US$ 40.19 billion).
India also had major FDI inflows during April 2000-March 2026, coming from Singapore at Rs. 13,92,006 crore (US$ 192.68 billion) with a total share of 24.72%, followed by Mauritius at 23.71% with Rs. 11,50,846 crore (US$ 186.76 billion), the USA at 10.39% with Rs. 5,91,561 crore (US$ 81.82 billion), the Netherlands at 7.19% with Rs. 3,92,849 crore (US$ 56.67 billion), and Japan at 6.11% with Rs. 3,16,522 crore (US$ 48.14 billion).
India’s SME IPO market continued to witness strong activity during January-July 2026, reflecting sustained investor participation and growing access to capital markets for small and mid-sized enterprises. During the period, 91 SME IPOs were launched, collectively mobilising around Rs. 4,105.23 crore (US$ 440 million), underscoring the growing role of the SME segment in supporting fundraising and business expansion across diverse sectors.
Recent Developments/Investments
Recent speedy infrastructure investments, the inclusion of more sectors under the PLI scheme, an increase in public investments, and increasing PE/VC activity have led to plenty of investments in the Indian market. A stabilizing economic backdrop and financial oversight have provided investors with a perfect opportunity to invest in the country and have made India a rising economic powerhouse. Some of the recent investments and developments in this space are as follows:
- India’s mutual fund industry continued to maintain strong growth momentum in July 2026, with average assets under management (AAUM) standing at Rs. 86,33,798 crore (US$ 904.6 billion). Assets under Management (AUM) stood at Rs. 85,75,657 crore (US$ 898.5 billion) as on July 31, 2026, reflecting the continued expansion of the mutual fund industry. The total number of mutual fund folios stood at 28.09 crore (280.9 million), including around 21.40 crore (214 million) folios across equity, hybrid and solution-oriented schemes, highlighting strong retail participation.
- For FY26, the electronics and IT hardware sector received the highest PLI budget allocation at Rs. 9,000 crore (US$ 1.02 billion), followed by automobiles and auto components Rs. 2,818.85 crore (US$ 318 million) and pharmaceuticals Rs. 2,444.93 crore (US$ 275.9 million). The increased outlay underscores the government’s continued push to boost domestic manufacturing and high-value sectors.
- Total outstanding non-resident deposits stood at Rs. 15,67,984 crore (US$ 165.65 billion) at the end of March 2026, compared to Rs. 14,09,330 crore (US$ 164.68 billion) at the end of March 2025. Among the major categories, NR(E)RA deposits stood at Rs. 9,32,947 crore (US$ 98.56 billion), followed by FCNR(B) deposits at Rs. 3,19,514 crore (US$ 33.76 billion) and NRO deposits at Rs. 3,15,523 crore (US$ 33.33 billion).
- India’s deal activity in Q2 2026 recorded 592 deals worth Rs. 3.74 lakh crore (US$ 39.7 billion), reflecting strong value concentration despite lower deal volumes compared with Q1 2026. M&A activity accounted for 240 deals worth Rs. 2.63 lakh crore (US$ 27.9 billion), while private equity (PE) and venture capital (VC) activity comprised 325 deals worth Rs. 79,187 crore (US$ 8.4 billion). According to Grant Thornton Bharat’s Q2 Dealtracker, M&A value was driven by large transactions, including Sun Pharmaceutical Industries Ltd’s acquisition of a 100% stake in Organon & Co. for Rs. 1.11 lakh crore (US$ 11.75 billion), Bharti Airtel Ltd’s acquisition of a 16% stake in Airtel Africa plc for Rs. 27,979 crore (US$ 2.97 billion) and EPL Ltd’s stake acquisition in Indovida India Pvt Ltd for Rs. 18,854 crore (US$ 2 billion).
- According to the recent report by Stockholm International Peace Research Institute (SIPRI), In 2024, India ranked as the world's fifth-largest military spender, allocating Rs. 7,63,018 crore (US$ 86.1 billion) towards modernizing various weaponry and combat systems.
- In India, co-working spaces such as Urban Vault, Incuspaze, The Executive Centre, and Awfis are increasing their investments in ESG (Environmental, Social, and Governance) practices to cater to the rising need for eco-friendly workplaces. Urban Vault, headquartered in Bengaluru, experienced a 41% rise in leasing activity for ESG-certified properties in the latter part of the fiscal year 2024.
- Top M&A Deals in 2026:
- On 30 June 2026, Kotak Mahindra Bank Ltd. entered into a definitive agreement to acquire Deutsche Bank’s retail banking, affluent private banking and wealth management business in India.
- On 23 May 2026, Anupam Rasayan India Ltd. entered into a definitive agreement to acquire a 43.3–48.2% equity stake in Bliss GVS Pharma Limited, along with an open offer to the company’s public shareholders.
- On 26 April 2026, Sun Pharmaceutical Industries Ltd. signed a definitive agreement to acquire 100% of Organon & Co. in an all-cash transaction valued at an enterprise value of US$ 11.75 billion.
- On 30th June 2026, Kotak Mahindra Bank entered into a definitive agreement to acquire Deutsche Bank’s retail banking, affluent private banking and wealth management business in India, comprising approximately Rs. 29,000 crore (US$ 3.10 billion) in loans, Rs. 16,000 crore (US$ 1.71 billion) in deposits and Rs. 10,500 crore (US$ 1.12 billion) in assets under management.
- On March 6, 2025, JSW Energy completed the acquisition of KSK Mahanadi Power Company Limited, acquiring a 74% stake and expanding its operational capacity beyond 10 GW, strengthening its position in India’s power sector.
- On February 10, 2026, the National Company Law Tribunal (NCLT) approved the merger of Ambuja Cements with Sanghi Industries, advancing the Adani Group’s cement consolidation strategy and strengthening operational efficiencies and capacity expansion.
- On January 15, 2026, Indian Hotels Company Limited (IHCL) signed definitive agreements to acquire a 51% stake in Brij Hotels, strengthening its leadership in India’s leisure tourism segment and expanding its portfolio of boutique experiential properties.
- Top M&A Deals in 2025:
- Emirates NBD Bank acquired a controlling stake in RBL Bank through a primary capital infusion of Rs. 26,850 crore (US$ 3.0 billion). The transaction represents the largest foreign direct investment in Indian financial services, and the largest equity fundraise by an Indian bank and includes a mandatory open offer to public shareholders.
- In December 2025, Reliance Industries completed the merger of Star Television Productions Ltd (STPL) into Jiostar India Private Ltd, consolidating the ‘STAR’ brand within its media joint venture with The Walt Disney Company.
- September 2025 marked a landmark development in India’s banking sector with Japan’s Sumitomo Mitsui Banking Corporation (SMBC) completing the acquisition of a 20% stake in Yes Bank. The transaction made SMBC the largest shareholder in Yes Bank and represents the largest cross-border investment in an Indian private sector bank to date.
- In September 2025, Amazon completed the acquisition of Axio (formerly Capital Float) following approval from the Reserve Bank of India, making it one of Amazon’s largest acquisitions in the country. The deal integrates Axio’s digital lending and checkout finance capabilities, used to power Buy Now Pay Later services for Amazon Pay and serving over 10 million customers, with Amazon’s technology, reach, and bank partnerships.
- Jio Financial Services Limited (JFSL) and Allianz of Germany have incorporated a joint venture company, Allianz Jio Reinsurance Limited (AJRL), to operate in the Indian reinsurance sector.
- On October 15, 2025, Chennai-based Trusted Aerospace Engineering (TASE Global) completed the acquisition of US-based Joined Alloys for Rs. 106 crore (US$ 12.7 million), strengthening its aerospace manufacturing and special processes capabilities. The acquisition expands TASE Global’s footprint in North America and enhances its access to advanced aerospace fabrication, serving regulated industries including the US Department of Defense.
- In July 2025, logistics major Delhivery completed the acquisition of Ecom Express for up to Rs. 1,407 crore (US$ 170 million), marking a significant consolidation in India’s parcel delivery market. The transaction closed on July 18, with financials to be consolidated from the closing date, while operational integration is underway and expected to be completed over the next six months.
- In June 2025, Torrent Pharmaceuticals acquired J B Chemicals & Pharmaceuticals for Rs. 26,595 crore (US$ 3 billion). The transaction strengthened Torrent’s position in the Indian pharmaceutical market. (Domestic deal)
- In March 2025, Sun Pharmaceutical Industries Limited announced the acquisition of Checkpoint Therapeutics, a Nasdaq-listed immunotherapy and targeted oncology company. The transaction strengthens Sun Pharma’s presence in innovative and specialty pharmaceuticals by adding UNLOXCYT, an FDA-approved treatment for advanced cutaneous squamous cell carcinoma.
- In February 2025, ONGC NTPC Green completed the 100% acquisition of Ayana Renewable Power for US$ 2,247 million (Rs. 18,700 crore), marking one of the largest renewable energy acquisitions in India. (Domestic deal)
- In May 2025, Sumitomo Mitsui Banking Corporation (SMBC) acquired a 20% stake in Yes Bank for US$ 1,590 million (Rs. 13,200 crore), reflecting continued foreign interest in India’s banking sector. (Inbound deal)
- In June 2025, JSW Paints acquired a 75% stake in Akzo Nobel India for US$ 1,098 million (Rs. 9,100 crore), expanding its footprint in the paints and building products market. (Domestic deal)
- During FY27, up to August 12, 2026, debt instruments attracted net inflows of Rs. 68,120 crore (US$ 7.13 billion), while mutual fund schemes received Rs. 988 crore (US$ 0.10 billion). Alternative Investment Funds (AIFs) also recorded inflows of Rs. 10 crore (US$ 1 million) during the period. Cumulative FPI investments in India stood at Rs. 14,47,459 crore (US$ 263.85 billion) as of August 12, 2026, highlighting continued foreign investor participation in India’s financial markets.
- In H1 2026:
- 1H2026 recorded US$ 20.5 billion in PE/VC investments, with 604 deals compared to 734 deals in 1H2025.
- The largest deal was Blackstone, Bolt Ventures and others acquiring Royal Challengers Bengaluru for US$ 1.8 billion.
- Real estate led sector-wise deal activity in 1H2026, with investments of Rs. 38,651 crore (US$ 4.1 billion), followed by technology at Rs. 29,224 crore (US$ 3.1 billion) and financial services at Rs. 28,281 crore (US$ 3.0 billion).
- Growth investments dominated deal activity, with total investments of Rs. 65,989 crore (US$ 7.0 billion), followed by buyout investments at Rs. 50,906 crore (US$ 5.4 billion).
- Start-up investments recorded Rs. 49,963 crore (US$ 5.3 billion) across 396 deals in 1H2026.
- Credit investments recorded Rs. 20,739 crore (US$ 2.2 billion) across 47 deals.
- PIPE deals remained the smallest segment, with investments of Rs. 4,921 crore (US$ 0.522 billion) across 28 deals.
- In February 2026:
- February 2026 recorded US$ 3.7 billion in PE/VC investments, a 2% year-on-year increase (US$ 3.7 billion in February 2025).
- The largest deal was Blackstone, TVS Capital, 360 ONE and others investing US$ 1.2 billion in Neysa Networks.
- Technology led deal activity in February 2026, with investments touching Rs. 15,538 crore (US$ 1.7 billion).
- Financial services continued to attract strong investor interest, with deal values of Rs. 6,398 crore (US$ 0.70 billion) in February 2026.
- Infrastructure recorded moderate investment activity, with deal values of Rs. 3,537 crore (US$ 0.387 billion) in February 2026.
- Buyout investments dominated deal activity, with total investments of Rs. 14,624 crore (US$ 1.6 billion), followed by growth investments at Rs. 7,987 crore (US$ 0.874 billion).
- Start-up investments remained resilient, with investments amounting to Rs. 7,458 crore (US$ 0.816 billion).
- Credit investments recorded deal values of Rs. 2,816 crore (US$ 0.308 billion).
- PIPE deals remained limited, with investments of Rs. 631 crore (US$ 0.069 billion) in February 2026.
Government Initiatives
The steps taken by the Government during the last few years to attract investments have borne fruit, as is evident from the record volume of FDI inflow that was received in the country in FY22. The government has launched policies that significantly simplify the ease of doing business, as evidenced by India's jump from rank 142 in 2015 to rank 63 in 2020 in the Doing Business Reports of the World Bank. Some of these policies are:
- On January 2, 2026, the Government launched two key interventions under the Export Promotion Mission to strengthen MSME exports, including a 2.75% interest subvention on pre- and post-shipment credit and collateral guarantee support of up to 85% through CGTMSE.
- The Government of India has introduced multiple measures to enhance ease of doing business for MSMEs, including a revised MSME classification effective April 1, 2025, aimed at enabling technology upgradation and business growth. Access to finance has been strengthened through schemes such as the Emergency Credit Line Guarantee Scheme (ECLGS) with an outlay of Rs. 5,00,000 crore (US$ 60.5 billion), which supported 14.6 lakh MSME accounts, and an additional Rs. 9,000 crore (US$ 1.1 billion) infusion into CGTMSE to enable Rs. 2,00,000 crore (US$ 24.2 billion) of collateral-free credit.
- India’s new rules for environmental, social, and governance investments and ratings are likely to attract more investors to the nation’s US$ 1.4 billion market and serve as a model for other countries. Over the last two years, India has implemented many measures to regulate its market for green and other assets, most notably permitting domestic fund managers to create plans under six types of ESG strategies.
- Securities and Exchange Board of India (SEBI) announced disclosure norms for foreign portfolio investors (FPIs) will come into effect from November 1st, 2023. Under these regulations, overseas funds that hold more than 50% of their equity investments in a single Indian corporate group or have more than Rs. 25,000 crore (US$ 3.01 billion) of equity assets under management (AUM) in the Indian market, will have to provide detailed information about their beneficial owners.
- The Reserve Bank of India has taken a number of actions to increase foreign exchange inflows. These actions consist of:
- Exempting additional Foreign Currency Non-Resident (Bank) [FCNR(B)] and Non-Resident (External) Rupee (NRE) deposits from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).
- Authorization for banks to accept new FCNR(B) and NRE deposits without regard to current interest rate regulations until the end of October 2022.
- Inclusion of all new issuances of 7-year and 14-year G-Secs under the Fully Accessible Route (FAR) for FPls.
- Exemption from the short-term limit for FPls' investments in G-Secs and corporate debt made until October 31, 2022.
- Permitting FPI in commercial paper and non-convertible debentures with an original maturity of up to one year.
- A temporary increase in the limit for external commercial borrowings (ECBs) under the automated route from US$ 750 million or its equivalent per fiscal year to US$ 1.5 billion.
- Increase in the all-in cost ceiling under the ECB framework by 100 basis points, subject to the borrower having an investment grade rating.
- Permission for AD Cat-I banks to use foreign currency borrowings made abroad to fund foreign currency loans to organizations for a variety of end uses other than exports.
- The introduction of the Goods and Services Tax, easing liquidity problems of NBFCs and Banks, the reduction of corporate tax, improvements to the business environment, changes to the FDI policy, reduction in Compliance Burden, policies to support domestic manufacturing through public procurement orders, and the Phased Manufacturing Program (PMP) are just a few of the actions taken by the government to encourage domestic investments.
- In the Budget 2023-24 session, it was informed that the Government has decided to continue the 50-year interest-free loan to state governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions, with a significantly enhanced outlay of Rs. 1.3 lakh crore (US$ 16 billion).
- The National Logistics Policy (NLP) aims to decrease the cost of logistics and make it to par with that of other developed nations. A comprehensive approach to address cost inefficiencies is being laid down by establishing an interdisciplinary, cross-sectoral, multijurisdictional framework for enhancing the entire logistics ecosystem. This would bolster India's economy, provide employment opportunities, and make Indian products more competitive in the global market. It was launched on September 17, 2022.
- Foreign Exchange Management (Overseas Investment) Regulations, 2022 is an updated legal framework for foreign investment that offers simplification of the previous framework and has been adjusted to reflect the current dynamics of business and the economy. The "Ease of Doing Business" has been greatly improved with the addition of clarity about overseas direct investment and overseas portfolio investment, as well as the transition of numerous overseas investment-related transactions that are now under an automatic route that was previously under the approved route.
- The Government of India increased FDI in the defence sector by liberalizing it to 74% through the automatic route and 100% through the government route.
- The Foreign Investment Facilitation Portal (FIFP) is a new online single-point interface of the government for investors to facilitate Foreign Direct Investment proposals to evaluate and further authorize them under the Government approval route.
- The sectoral cap for the pharmaceutical industry has been lowered, 74% of FDI is permitted in the Brownfield Pharma sector via the automatic method, and 100% is permitted via the approved route.
- In the Civil Aviation Sector, 100% FDI is allowed under automatic route in Brownfield Airport projects.
- For Single Brand Retail Trading, local sourcing norms have been relaxed for up to 3 years and 100% FDI is allowed under automatic route.
- The Department for Promotion of Industry and Internal Trade (DPIIT) has introduced a dynamic reform exercise called the Business Reforms Action Plan, which ranks all the states and UTs in the country based on the implementation of designated reform parameters. The reforms have focused on streamlining the current rules and procedures and getting rid of unnecessary requirements and steps. The Action Plan covers multiple reform areas such as:
- Investment Enablers
- Online Single Window System
- Land administration and Transfer of Land and Property
- Construction Permits Enabler
- Labour Regulation Enablers
- Environment Registration Enablers
- Inspection Enablers
- Paying Taxes
- Obtaining Utility Permits
- The government has implemented an investor-friendly strategy to encourage FDI, and the majority of sectors are accessible to 100% FDI under the automatic route. In order to keep India a desirable and welcoming place for investors, the FDI policy is also revised frequently. Any changes to the policy are made after extensive consultations with stakeholders, including apex industry chambers, associations, representatives of industries/groups, and other organizations.
- The National Monetization Pipeline (NMP) was launched in 2021 to provide a comprehensive view to investors and developers of the available investment avenues in Infrastructure. Over a four-year period, the total indicative value of NMP for the Central Government's core assets has been assessed at Rs. 6 lakh crore (US$ 75.18 billion).
- The Union Cabinet set up Empowered Group of Secretaries (EGoS) and Project Development Cells (PDCs) in Ministries/Departments of the Government of India to expedite investments in conjunction with state governments, hence expanding India's pipeline of investable projects and attracting more FDI and domestic investments.
- The Ministry of Labour and Employment has taken several steps to streamline labour laws to make conducting business easier. By condensing, combining, and rationalizing the pertinent provisions of 29 Central Labour Laws, the Government has notified four labour codes: the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Code on Occupational Safety, Health, and Working Conditions, 2020.
Road Ahead
India’s investment environment is set to strengthen further, driven by a stable reform agenda, expanding domestic demand, and rising confidence among global and domestic investors. In the years ahead, capital deployment is expected to concentrate on scaling manufacturing capacities, upgrading infrastructure networks, and advancing digital adoption across sectors. Flagship initiatives such as the Production-Linked Incentive framework, large infrastructure programmes, and the transition towards clean energy and electric mobility are likely to remain key enablers of investment inflows.
The next stage of development is expected to be marked by wider participation from small and medium enterprises, start-ups, and innovation-led sectors, including artificial intelligence, semiconductors, and climate-focused technologies. Greater formalisation and deeper financial inclusion are also improving market access and broadening the base of investible opportunities.
India’s structural strengths continue to support its attractiveness as an investment destination.
A young workforce, rising disposable incomes, ongoing urban expansion, and a growing middle class are creating sustained demand across sectors. At the same time, regulatory simplification, logistics modernisation, and sustainability-oriented policies are improving ease of doing business and operational efficiency.
Looking ahead, policy continuity, reform momentum, and increasing global interest in India’s digital and green transition are expected to sustain investment activity. With a maturing innovation ecosystem and deeper capital markets, India is well positioned to offer long-term opportunities across diverse industries and asset classes.
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