Fresh data from the Department for Promotion of Industry and Internal Trade (DPIIT) reveals that Singapore has maintained its position as the primary source of Foreign Direct Investment (FDI) into India for the first nine months of the 2025-26 fiscal year. Total FDI equity inflows during this period rose 18% year-on-year to reach $47.87 billion.
Top Investing Nations (Apr-Dec FY26)
Singapore contributed more than a third of India’s total equity inflows, while the United States saw a dramatic nearly 100% increase in its investment volume.
The “Tax Haven” Surge
A notable trend in this fiscal cycle is the sharp spike in capital coming from offshore financial centers and tax havens, suggesting a tactical shift in how global corporations are routing their Indian investments.
-
Cayman Islands: Inflows rose five times, jumping from $422 million in 2024 to $2 billion in the same period for FY26.
-
Cyprus: Maintained steady growth, investing $1.4 billion compared to $1.2 billion in the previous year.
-
Luxembourg: Saw a significant climb to $545 million from $352.67 million.
Sectoral & Regional Winners
The “Digital India” push continues to dictate where global capital is flowing, with software and hardware dominating the landscape.
-
Leading Sectors:
-
Computer Software & Hardware: 22% share ($10.7 billion).
-
Services Sector (Finance, Banking, R&D): 18% share ($8.42 billion).
-
Trading: $3.36 billion.
-
-
Top Recipient States:
-
Maharashtra: Remains the top destination with $15.38 billion in inflows.
-
Karnataka: Follows with $11.15 billion.
-
Gujarat: Secured $5 billion.
-
Strategic Drivers
The 18% growth in total FDI is being attributed to several high-impact policy shifts implemented over the last two years:
-
Insurance Reform: Raising the FDI cap in the insurance sector to 100%.
-
Defense Liberalization: Increasing the Automatic Route limit from 49% to 74%.
-
Tax Policy: The official abolition of the “Angel Tax” and new PLI (Production Linked Incentive) incentives activated in early 2025.
While the total FDI (including equity, reinvested earnings, and other capital) hit $73.31 billion, the concentration of funds in software and the resurgence of tax havens highlight both India’s tech appeal and the increasingly complex structures used by global investors.
