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. With real GDP expanding by 7.8% in Q1 FY26, the country continues to lead global growth, powered by strong domestic consumption, a young and skilled workforce, and consistent policy reforms.
Over the past decade, India has attracted FDI worth Rs. 66,37,734 crore (US$ 748.78 billion), reflecting rising investor confidence and the country’s growing economic depth. A thriving middle class of nearly 400 million people, rising incomes, and increasing rural demand continue to drive consumption across sectors. The investment ecosystem has also broadened, with retail participation reaching new highs as more than 9.5 crore investors now hold stocks directly and over 11 crore invest through mutual funds, whose assets have expanded sixfold in ten years. Supported by stable governance, improved infrastructure, and a growing focus on technology and sustainability, India is steadily laying the groundwork for long-term, inclusive, and resilient growth.
Market Activity
Real Gross Domestic Product (GDP) grew by 7.8% in Q1 FY26, the highest in the last five quarters. In comparison, growth was 7.4% in Q4 FY25 and 6.5% in Q1 FY25. According to the Ministry of Statistics and Programme Implementation, nominal GDP rose by 8.8% during the same period. The Reserve Bank of India (RBI) has raised India’s GDP growth forecast for FY26 to 6.8%, up from its earlier estimate of 6.5%. These figures make India the fastest-growing major economy in the world, and this economic growth has translated to the domestic investment market in India. Retail investors, mutual funds, and PE/VC firms have all stepped up their domestic investments in the Indian market.
The stock market has seen a significant increase in the number of retail investors, exceeding 9.5 crore. These investors directly hold nearly 10% of the market through investments in ~2,500 listed companies. Retail investments, both direct and indirect through mutual funds, have increased over nearly seven-fold in the past decade, with the total number of investors reaching 11.5 crore as of May 2025, according to data from the National Stock Exchange (NSE).
India registered 301 Private Equity (PE) deals worth Rs. 49,745 crore (US$ 5.7 billion) in Q3 2025, recording a 7% rise over the previous quarter. India-focused PE-VC funds raised Rs. 21,576 crore (US$ 2.47 billion) across 22 funds, a 148% YoY increase, driven by strong inflows into the IT & ITeS sector (US$ 2.4 billion). Mumbai led in investment value, while Bangalore topped in deal volume, reaffirming their positions as India’s leading investment hubs.
On the FDI front, according to the Department for Promotion of Industry and Internal Trade (DPIIT), India's cumulative FDI inflow stood at Rs. 97,22,411 crore (US$ 1.09 trillion) between April 2000-June 2025; this was mainly due to the government's efforts to improve the ease of doing business and relaxed FDI norms.
From April 2000 to June 2025, India’s services sector attracted the highest FDI equity inflow of 16%, amounting to Rs. 7,93,783 crore (US$ 90.20 billion), followed by the computer software and hardware industry at 16%, amounting to Rs. 8,31,772 crore (US$ 94.52 billion), trading at 6% amounting to Rs. 3,38,826 crore (US$ 38.50 billion), telecommunications at 5% amounting to Rs. 2,41,299 crore (US$ 27.42 billion), and the automobile industry at 5% amounting to Rs. 2,59,753 crore (US$ 29.52 billion).
India also recorded major FDI inflows during April 2000-June 2025, coming from Singapore at Rs. 12,57,392 crore (US$ 142.88 billion) with a total share of 24%, followed by Mauritius at Rs. 11,10,692 crore (US$ 126.22 billion) with 21%, the USA at Rs. 5,41,654 crore (US$ 61.56 billion) with 10%, the Netherlands at Rs. 3,68,694 crore (US$ 41.90 billion) with 7%, and Japan at Rs. 2,88,090 crore (US$ 32.74 billion) with 6%.
India’s SME IPO market maintained strong momentum in 2025, with companies raising Rs. 6,819 crore (US$ 769.5 million) by end-August 2025, making it the second-highest fundraising year on record after 2024. The trend reflects sustained investor confidence and growing participation of small and medium enterprises in capital markets.
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:
- The Indian Mutual Fund Industry reached an Average AUM of Rs. 77,77,802 crore (US$ 877.66 billion) in September 2025, with total AUM at Rs. 75,61,309 crore (US$ 853.23 billion) as on September 30, 2025. The industry has expanded over sixfold in the past decade, rising from Rs. 11,87,000 crore (US$ 133.94 billion) in 2015 to Rs. Rs. 75,61,309 crore (US$ 853.23 billion) in 2025, reflecting strong investor participation and deepening financial inclusion.
- Despite a downturn in Indian markets, retail investors remain committed to long-term investments, with equity mutual fund AUM reaching Rs. 30.57 lakh crore (US$ 358.38 billion) in December 2024, a 40.3% increase YoY.
- 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 received Rs. 2,818.85 crore (US$ 318 million) and pharmaceuticals received 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 NRI deposits reached Rs. 14,15,761 crore (US$ 164.7 billion) at the end of March 2025, compared to Rs. 13,05,732 crore (US$ 151.9 billion) at the same time last year. Sequentially, outstanding deposits were at Rs. 13,78,197 crore (US$ 160.33 billion) in February 2025.
- The Indian tech sector saw deals worth US$ 635 million during July-September 2024, marking a 31% YoY increase, as per Grant Thornton Bharat's third-quarter Dealtracker report. While the third quarter saw the highest deal volumes since the second quarter of 2023, it recorded the lowest for 2024, indicating a focus on strategic investments over large-scale acquisitions.
- The demand for wealth management services is projected to more than double, with assets under management (AUM) expected to increase from Rs. 95,23,800 crore (US$ 1.1 trillion) in FY24 to Rs. 1,99,13,400 crore (around US$ 2.3 trillion) by FY29.
- 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.
- The demand for wealth management services is projected to more than double, with assets under management (AUM) expected to increase from Rs. 95,23,800 crore (US$ 1.1 trillion) in FY24 to Rs. 1,99,13,400 crore (around US$ 2.3 trillion) by FY29.
- Top M&A Deals in H1 2025:
- India’s merger and acquisition (M&A) activity remained strong during the first half (H1) of 2025, led by major domestic and inbound deals across pharmaceuticals, infrastructure, banking, and manufacturing sectors.
- 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 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)
- Foreign Portfolio Investor (FPI) net investments for 2025-26 (up to October 13, 2025) stood at Rs. 16,08,644 crore (US$ 181.52 billion).
- In August 2025, 43 Department for Promotion of Industry and Internal Trade (DPIIT)-registered startups raised Rs. 3,338 crore (US$ 381.39 million). The major funding rounds included investments in The Sleep Company, DarwinBox, and Renee Cosmetics.
- In Q3 (July-September) of 2025:
- During Q3 2025, India recorded 238 Venture Capital (VC) investments valued at Rs. 20,474 crore (US$ 2.35 billion).
- The largest VC deal was the US$ 270.13 million investment in Roppen Transportation Services, the parent company of Rapido, by Prosus Ventures and WestBridge through a secondary transaction.
- VC firms with Alternative Investment Fund (AIF) vehicles participated in 131 investments, accounting for over 55% of total VC deals.
- A total of 141 Department for Promotion of Industry and Internal Trade (DPIIT)-registered startups raised US$ 1.53 billion, representing 59% of the total VC deal volume.
- IT and IT-enabled Services (ITeS) sector led VC funding with US$ 2.40 billion (Rs. 28,723 crore), driven by the investment in Rapido. This was followed by US$ 240 million (Rs. 2,131 crore) in life sciences tech firm Axtria and US$ 170 million (Rs. 1,461 crore) in AI analytics company Fractal Analytics.
- The Banking, Financial Services, and Insurance (BFSI) sector ranked second, securing US$ 917.38 million (Rs. 11,273 crore), led by US$ 227.42 million (Rs. 1,950 crore) in Infinity Fincorp Solutions and US$ 214.54 million (Rs. 1,876 crore) in Aadhar Housing Finance Limited.
- The Manufacturing sector came third with total funding of US$ 805.25 million (Rs. 5,561 crore), led by the acquisition of VIP Industries and a US$ 136.08 million (Rs. 1,200 crore) investment in ILJIN Electronics India.
- Bengaluru emerged as the leading city for VC investments.
- The quarter also recorded 31 VC exits, generating Rs. 14,284 crore (US$ 1.64 billion).
- The largest Private Equity-Venture Capital (PE-VC) deal announced during the month was Neo Asset Management’s acquisition of SolarArise India Projects worth Rs. 1,400 crore (US$ 160.05 million).
- As per the latest Market Handbook released by the Council on Energy, Environment and Water’s Green Finance Centre (CEEW-GFC), the share of renewable energy (RE) in India’s total foreign direct investment (FDI) inflows increased from around 1% in 2020-21 to nearly 8% in 2024-25. The RE sector attracted Rs. 28,300 crore (US$ 3.4 billion) in FDI during the first three quarters of 2024-25, almost equal to the total inflows of Rs. 30,800 crore (US$ 3.7 billion) recorded in 2023-24, reflecting its rising appeal among global investors.
- Top M&A Deals in 2024:
- India’s merger and acquisition (M&A) activity in 2024 was led by major domestic and inbound deals across key sectors such as energy, media, infrastructure, and healthcare.
- Gujarat Gas Ltd merged with Gujarat State Petronet Ltd and Gujarat State Petroleum Corporation Ltd in a domestic merger valued at Rs. 50,070 crore (US$ 5.65 billion).
- Reliance Industries Ltd and Viacom 18 Media Pvt Ltd (Media Undertaking) entered into a joint venture with Walt Disney Co’s Star India Pvt Ltd in a domestic deal worth Rs. 40,145 crore (US$ 4.53 billion).
- Cartica Acquisition Corp acquired Nidar Infrastructure Ltd in an inbound merger valued at Rs. 24,370 crore (US$ 2.75 billion).
- Aster DM Healthcare Ltd acquired Quality Care India Ltd from TPG Capital LP and Blackstone Inc in a domestic merger valued at Rs. 18,876 crore (US$ 2.13 billion).
- Data Infrastructure Trust acquired ATC Telecom Infrastructure Pvt Ltd from American Tower Corp in a domestic strategic investment worth Rs. 17,547 crore (US$ 1.98 billion).
- NHIT Eastern Projects Pvt Ltd acquired seven toll road projects from the National Highways Authority of India (NHAI) in a domestic asset acquisition valued at Rs. 16,749 crore (US$ 1.89 billion).
- Mankind Pharma Ltd acquired Bharat Serums & Vaccines Ltd from Advent International LP in a domestic strategic acquisition valued at Rs. 14,356 crore (US$ 1.62 billion).
- Jubilant Bhartia Group acquired Hindustan Coca-Cola Holdings Pvt Ltd from Coca-Cola Co in a domestic strategic acquisition valued at Rs. 13,116 crore (US$ 1.48 billion).
- In March 2024, Tata Motors announced of signing a Memorandum of Understanding (MoU) with Tamil Nadu government to set up Rs. 9,000 crore (US$ 1.08 billion) vehicle manufacturing facility in the state. This investment in expected to be invested over five years and will generate approximately 5,000 direct and indirect jobs.
- Union Minister of State (Independent Charge) Science & Technology; MoS PMO, Personnel, Public Grievances, Pensions, Atomic Energy and Space, Dr. Jitendra Singh, has stated that currently, Foreign Direct Investment (FDI) up to 100% is permitted in the domain of Satellites-Establishment and Operations, but exclusively through the Government route.
- The Adani Group has entered into four agreements to invest more than Rs 12,400 crore (US$ 1.49 billion) in partnership with the government of Telangana, India, spanning various sectors.
- The Adani Group has signed a Memorandum of Understanding (MoU) with the Government of Maharashtra to establish hyperscale data centre infrastructure, involving an investment of US$ 6.0 billion (Rs 50,000 crore).
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:
- The Indian government's Production-Linked Incentive (PLI) schemes continue to drive manufacturing, disbursing Rs. 21,534 crore (US$ 2.49 billion) in incentives across 12 sectors as of March 2025. These schemes have attracted significant investments of Rs. 1.76 lakh crore (US$ 20.39 billion), generating over Rs. 16.5 lakh crore (US$ 191.15 billion) in production/sales. For FY26, the budget increased allocations substantially for key sectors like Electronics and IT Hardware at Rs. 9,000 crore (US$ 1.04 billion), Automobiles and Auto Components at Rs. 2,818.85 crore (US$ 326.56 million), and Textiles at Rs. 1,148 crore (US$ 132.99 million), signalling continued focus on domestic manufacturing.
- 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 growth story continues to build strong momentum, supported by steady policy reforms, a rising domestic market, and growing investor confidence. Over the coming years, the focus will be on deepening the country’s manufacturing base, improving infrastructure, and accelerating digital transformation. Programmes like the Production-Linked Incentive (PLI) schemes, the National Infrastructure Pipeline, and the push towards renewable energy and electric mobility will continue to attract both domestic and foreign investors.
The next phase of India’s economic journey is likely to see greater participation from small and medium enterprises, start-ups, and new-age industries such as artificial intelligence, semiconductors, and green technology. Increased formalisation of the economy and stronger financial inclusion are expected to expand India’s consumer base further.
India’s long-term fundamentals remain strong. A young and skilled population, rising incomes, expanding urbanisation, and a growing middle class will keep domestic consumption robust. Government efforts to simplify regulations, strengthen logistics,
and promote sustainability will also make India a more efficient and competitive destination for investment. In the medium term, the combination of policy stability, investor-friendly reforms, and global interest in India’s digital and green transition will continue to drive the country’s growth. With consistent economic performance and an expanding innovation ecosystem, India is well-positioned to remain one of the world’s most attractive destinations for investment and business opportunities
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