Lok Sabha Question No. 4188 (UNSTARRED), answered on 2025-08-19
Subject: FDI Target
Ministry: COMMERCE AND INDUSTRY
Asked by: Shri Imran Masood

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE

## LOK SABHA

UNSTARRED QUESTION NO. 4188.

TO BE ANSWERED ON TUESDAY, THE 19 TH  AUGUST, 2025.

## FDI TARGET

## 4188.  SHRI IMRAN MASOOD:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state: वाणिज्य एवं उद्योग मंत्री

- (a) whether the Government proposes to reform its policies to achieve the $100 billion annual FDI target and if so, the details thereof along with the steps being taken in this regard;
- (b) the major reasons for FDI falling to a five-year low in the financial year 2024 and the steps taken to contain the same;
- (c) the  progress  made in liberalising  FDI  in  sensitive  sectors  such  as  Defence, Insurance and Telecom along with its impact on FDI in the year 2024; and
- (d) the efforts made to attract investments in Services, Software and Manufacturing sectors  and  the  timelines  fixed  for  achieving  the  FDI  target  along  with  the mechanisms for monitoring its progress?

## ANSWER

## वाणिज्य एवं उद्योग मंत्रालय में राज्य मंत्री ( श्री णिणिन प्रसाद ) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI JITIN PRASADA)

- (a): The  Government  reviews  the  FDI  policy  on  an  ongoing  basis  and  makes significant changes from time to time, to ensure that India remains an attractive & investor-friendly destination. However, the Government does not fix targets for FDI inflows as FDI is largely a matter of private business decisions. FDI inflows  depend on a host of factors such as availability of natural resources, market size,  infrastructure,  political  and  general  investment climate, as well as macroeconomic stability and investment decisions of foreign investors.

The  Government  of  India  always  strives  to  attract  larger  FDI  by  removing regulatory barriers, streamlining processes, developing infrastructure, bettering logistics  and  improving the business environment by enhancing the Ease of Doing Business (EoDB).

To further strengthen a seamless business regulatory framework across the country and nudge states to promote healthy competition to attract investment, including  FDI,  various  initiatives  are  being  undertaken.  The  Government  of India  released  Business  Reforms  Action  Plan  (BRAP)  2024  rankings  and Logistics  Ease  Across  Different  States  (LEADS)  2024  report  to  inter-alia communicate to potential investors examples of positive business ecosystem as well as logistics performance undertaken by various States and UTs. The Regulatory  Compliance  Burden  (RCB)  initiative  has  resulted  in  over  42,000 compliance reductions, under 670 acts nationwide. Through the Jan Vishwas (Amendment of Provisions) Act, 2023, the Government has decriminalised 183 provisions across 42 Central Acts from 19 Ministries/Departments.

The  Government  has  undertaken  transformative  reforms  across  multiple sectors to liberalise FDI norms. Between 2014 and 2019, significant reforms included increased FDI caps in the Defence, Insurance, and Pension sectors, and liberalised policies for Construction, Civil Aviation, and Single Brand Retail Trading. From  2019 to 2024, notable measures includes allowing 100% FDI under  the  automatic  route  in  coal  mining,  contract  manufacturing,  and insurance intermediaries.

- (b): FDI inflow in India stood at USD 36.05 billion in 2013-14 and has increased since then. India registered its highest annual FDI inflow of USD 84.84 billion in the  financial  year  2021-22.  It  has  slightly  declined  post  due  to  the  threat  of global recession and economic crisis due to geopolitical conflicts and global protectionist measures. However, during FY 2024-25, FDI inflow has increased by 14% compared to previous FY 2023-24 (i.e. from USD 71.28 billion to USD 80.62  billion).  The  share  of  Insurance,  Telecommunications  and  Defence Industries, in FDI  Equity  inflow  were  9.85%, 1.49% and 0.004% respectively during  FY  2024-25.

This reflects India's growing appeal as a global investment destination, driven by a proactive  policy  framework,  a  dynamic  business  environment,  and increasing international competitiveness. FDI has played a transformative role in India's development by providing substantial non-debt financial resources, fostering technology transfers, and creating employment opportunities.

- (c): FDI in the Defence sector is allowed up to 74% through the Automatic Route (from  earlier  49%)  for  companies  seeking  new  industrial  licenses.  Further, 100% FDI in the Telecom Sector is allowed under the Automatic Route. FDI sectoral cap in the insurance sector has been revised from 49% to 74% under the automatic route. The  Union Budget 2025 also announced for the further increase of FDI sectoral cap for the insurance sector from 74% to 100%. This enhanced  limit  will be available for those companies, which invest the entire premium in India. The share of Insurance, Telecommunications and Defence Industries, in FDI Equity Inflows was 4.13%, 0.63% and 0.009% respectively during FY 2023-24.
- (d): Various efforts taken to attract investments and improve India's attractiveness as  an  investment  destination  in  services,  software,  and  the  manufacturing sector, are at Annexure .

Apart from the above, the Government reviews FDI policy on a regular basis to make  it  more  investor-friendly  and  remove  the  policy  bottlenecks  that  are hindering investment inflows into the country. The extant FDI policy framework follows a negative list approach wherein barring a select few sectors, FDI is permitted  up  to  100%  under  the  Automatic  Route,  subject  to  applicable laws/regulations,  security  and  other  conditionalities.  Factors  like  improved global  competitiveness,  a  dynamic  innovation  ecosystem,  and  a  businessfriendly environment have been key drivers. This reflects India's growing appeal as a global investment destination, driven by a proactive policy framework, a dynamic business environment, and increasing international competitiveness. FDI  has  played  a  transformative  role  in  India's  development  by  providing substantial  non-debt  financial  resources,  fostering  technology  transfers,  and creating employment opportunities.

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## ANNEXURE

## ANNEXURE  REFERRED  TO  IN  REPLY  TO  PART  (d)  OF  THE  LOK  SABHA UNSTARRED QUESTION 4188 FOR ANSWER ON 19.08.2025.

The details of initiatives taken to attract investments and improve India's attractiveness as an investment destination, particularly in the Software, Service, and Manufacturing Sector, are placed below:

## 1. Software Sector:

To attract FDI in the software sector, Special Economic Zones (SEZs) and  Software Technology Parks of India (STPIs) have been set up to promote the growth of the software sector by providing tax benefits, infrastructure support, and regulatory ease. SEZs  offer  tax  incentives,  simplified  regulations,  and  world-class  infrastructure  to attract  foreign  and  domestic  investments  in  IT and  software  development.  Further, STPIs help to promote software development and exports in addition to Governmentbacked incentives like Make in India and Digital India.

## 2. Service Sector:

To address barriers in service sectors, concerted efforts have been put to promote the Startup  and  Innovation  Ecosystem  in  India.  For  instance,  to  stimulate  innovation and attract investments in startups, the government has abolished the 'angel  tax'  for all classes of investors, effective from 2025-26. This move  eliminates a significant  hurdle  for  early-stage  companies  and  their  investors. Further,  in  the Union Budget 2025, it was announced that a new Fund of Funds with ₹10,000 crore will be established to expand support for startups.

## 3. Manufacturing Sector:

The  Government  has  undertaken  several  initiatives  to  accelerate  growth  and establish India as a global manufacturing powerhouse. In order to attract investments, 100% FDI is allowed the automatic route in the Manufacturing sector. Launched in 2020, the PLI Scheme is a strategic leap toward self-reliance. Keeping in view  India's  vision  of  becoming  'Atmanirbhar',  Production  Linked  Incentive  (PLI) Schemes  for  14  key  sectors  were  announced  with  an  outlay  of  Rs.  1.97  lakh crore (over US$26  billion) to enhance  India's Manufacturing  capabilities  and exports.  Further,  the  Make  in  India  initiative  stands  as  a  testament  to  India's determination  to  reshape  its  manufacturing  landscape  and  enhance  its  global standing. In addition to ongoing schemes of various Ministries and Departments,  the Government has taken various steps to boost share of manufacturing in Gross Value Added (GVA). These measures include  Public Procurement (Preference to Make  in India) Orders, Phased Manufacturing Programme  (PMP) and QCOs (Quality Control  Orders)  etc. The initiatives taken by the Government have contributed  to  a  69%  increase  in  FDI  equity  inflow  in  the  manufacturing  sector, rising from USD 98 billion in 2004-2014 to USD 165 billion in 2014-2024.

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