India’s $81 Billion FDI Story: Why Manufacturing and PLI Schemes Are the Next Frontier for Investment Promotion Organisations

India’s FDI story is entering a new chapter. Total FDI inflows reached $81.04 billion in FY 2024-25, a 14% increase over the previous year, with manufacturing FDI growing 18% to $19.04 billion. Production-Linked Incentive (PLI) schemes, expanding free trade agreements and global supply chain diversification are reshaping India’s investment landscape. T&A Consulting helps investment promotion agencies, economic development organisations and foreign investors identify, evaluate and act on FDI opportunities across India’s high-growth sectors.

Introduction: The Scale of the Opportunity

India’s FDI trajectory reflects a deliberate policy architecture. Over the past decade, cumulative FDI inflows have grown from $36.05 billion in FY 2013-14 to over $81 billion in FY 2024-25. The government’s approach combines sector-specific liberalisation, performance-based fiscal incentives and a network of expanding trade agreements to attract quality investment. According to UNCTAD’s World Investment Report 2025, while global FDI fell 11% in 2024 to $1.5 trillion and developed economies contracted by 22%, flows to India and Southeast Asia remained stable, with strong project activity maintained.

The DPIIT Secretary has stated that the government is hopeful that FDI may cross the previous year’s record of $80.62 billion in 2026. Several factors support this optimism: the India-UK CETA, the India-EFTA agreement committing $100 billion over 15 years, big-ticket investment announcements from Google ($15 billion for an AI hub), Apple (manufacturing expansion) and Samsung (portfolio expansion), and India’s sustained GDP growth of over 6.5%.

Manufacturing FDI: The PLI-Driven Surge

Manufacturing has become the fastest-growing component of India’s FDI profile. The 18% growth to $19.04 billion in FY 2024-25 is directly linked to the Production-Linked Incentive (PLI) schemes, which the government launched across 14 sectors starting in 2020. The PLI model provides performance-based cash incentives, typically 4% to 6% of incremental sales over a base year, to manufacturers who meet defined thresholds for production, investment and domestic value addition.

The 14 PLI sectors and their combined approved outlay of approximately Rs 1.97 lakh crore ($24 billion) cover:

• Electronics and mobile manufacturing. This sector has seen the most dramatic impact. India’s mobile phone exports grew from negligible levels in 2017 to over $15 billion by 2025. Apple now manufactures a significant share of its global iPhone production in India through contract manufacturers Foxconn, Pegatron and Tata Electronics. Samsung has expanded its Noida factory to one of the world’s largest mobile phone production facilities.
• Automotive and auto components. The PLI scheme for automobile and auto components targets electric vehicles, hydrogen fuel cell vehicles and advanced automotive technology. With the India-UK CETA eliminating the 18% export duty on Indian OEMs, the automotive PLI aligns with new market access opportunities.
• Pharmaceuticals and medical devices. India already supplies over 20% of the world’s generic medicines. The PLI schemes for pharma and medical devices aim to reduce import dependence on active pharmaceutical ingredients (APIs), particularly from China, and build domestic manufacturing capacity for complex formulations and high-value medical equipment.
• Semiconductor and display manufacturing. India’s semiconductor ambitions are backed by a dedicated $10 billion incentive programme. Micron Technology has begun construction of a $2.75 billion assembly and testing facility in Gujarat. Tata Electronics is investing in fabrication capacity. These investments aim to position India in global semiconductor supply chains currently concentrated in Taiwan, South Korea and China.
• Renewable energy equipment. PLI schemes for solar modules and advanced chemistry cell (ACC) batteries target India’s goal of 500 GW non-fossil fuel energy capacity by 2030. Domestic solar module manufacturing capacity is expected to reach 100 GW by 2026, reducing reliance on Chinese imports.
• Textiles, food processing and other sectors. PLI schemes also cover technical textiles, food processing, speciality steel, white goods (air conditioners and LED lights), telecom and networking equipment and drones, creating a broad-based incentive architecture.

Where the FDI Is Going: Sectoral and Geographic Patterns

The services sector remained the largest single recipient of FDI equity in FY 2024-25, attracting $9.35 billion, a 40.77% increase over the previous year. Computer software and hardware accounted for 16% of total inflows, followed by trading at 8%. However, the manufacturing share is growing rapidly and is expected to surpass services within the next two to three years if current trends continue.

Geographically, Maharashtra and Karnataka continue to attract the largest share of FDI, driven by Mumbai’s financial services ecosystem and Bengaluru’s technology sector. Gujarat is emerging as a manufacturing FDI hub, anchored by GIFT City’s SEZ benefits and large-scale projects in semiconductors and renewable energy. Tamil Nadu, Telangana and Delhi-NCR round out the top investment destinations.

The investor profile is also diversifying. While Singapore, Mauritius and the United States remain the top source countries (partly reflecting round-tripping through financial centres), direct investment from Japan, South Korea, the UK and European nations is increasing, driven by the new trade agreements and supply chain diversification strategies.

The Trade Agreement Multiplier

India’s expanding network of free trade agreements is creating a multiplier effect on FDI. The India-UK CETA, the India-EFTA pact and the anticipated India-EU agreement collectively position India as a manufacturing and services hub with preferential access to multiple major markets. This is particularly significant for companies seeking a “China plus one” strategy, where India offers a combination of scale, cost competitiveness, English-speaking talent and improving infrastructure.

SEBI’s SWAGAT-FI regulations, effective from June 2026, will create a unified digital gateway for foreign investors, streamlining onboarding and compliance. This initiative is expected to reduce friction for institutional investors and strengthen India’s positioning as a more accessible and predictable destination for global capital.

Implications for Investment Promotion Organisations

For economic development agencies and investment promotion organisations, India’s FDI landscape demands a sophisticated approach:

• Move beyond generic “Invest in India” messaging. IPAs should develop sector-specific, data-driven investment cases that quantify PLI benefits, tariff savings under new trade agreements and infrastructure advantages in specific geographies.
• Engage Indian outward FDI. India’s outward FDI has also grown significantly. Nearly 56% of India’s outward FDI now flows into low-tax jurisdictions such as Singapore, Mauritius and the UAE. Economic development agencies in these and other countries should proactively target Indian companies seeking international expansion.
• Facilitate supply chain partnerships. Rather than competing for the same pool of large-ticket investments, IPAs should focus on facilitating supply chain partnerships, where foreign companies co-invest with Indian manufacturers to build components, subsystems or finished goods for export.
• Track state-level incentives. Indian states compete aggressively for FDI, offering their own incentive packages on top of central PLI schemes. IPAs should map state-level offerings (capital subsidies, land allocation, electricity concessions, stamp duty waivers) and help investors navigate the state-level approval process.
• Build relationships with DPIIT and state investment agencies. The Department for Promotion of Industry and Internal Trade (DPIIT) and state-level single-window agencies (such as Maharashtra’s MIDC or Gujarat’s iNDEXTb) are the primary institutional interfaces for foreign investors. IPAs should establish formal relationships with these bodies.

How T&A Consulting Supports FDI Strategy

T&A Consulting provides comprehensive FDI advisory services for investment promotion agencies, economic development organisations and foreign investors. Our services include:

• Sector-specific FDI opportunity mapping. We identify and evaluate investment opportunities across PLI sectors, mapping incentive structures, regulatory requirements and competitive landscapes for specific industries.
• Inward investment attraction strategy. We design and execute investment promotion campaigns for EDAs and state governments, targeting foreign companies aligned with India’s priority sectors.
• Market research and feasibility studies. We provide detailed market sizing, competitor analysis and demand assessment for companies evaluating India as an investment destination.
• Regulatory navigation and entity setup. We guide investors through India’s FDI framework, entity incorporation, environmental clearances, land acquisition and state-level approvals.
• India outbound FDI advisory. We help economic development agencies outside India attract Indian companies seeking international expansion, providing intelligence on Indian corporates’ overseas investment plans and facilitating introductions.

Whether you are an investment promotion agency seeking to attract Indian FDI, a foreign company evaluating India as a manufacturing base, or a government body looking to benchmark your investment attraction strategy, T&A Consulting provides the research, strategy and execution support you need.
Contact us at: pnijhawan@taglobalgroup.com to explore FDI opportunities in India’s high-growth sectors.

Sources & references:
Press Information Bureau (PIB), IBEF, India Briefing, Business Standard, UNCTAD