India’s Next FDI Policy Phase Should Focus On Investor Retention, Expansion: Assocham

New Delhi, Sep 22 (KNN) India’s next phase of foreign direct investment (FDI) policy should move beyond attracting capital to creating conditions that enable investors to sustain, expand and integrate their operations more deeply with the domestic economy, according to an Assocham study.

The study noted that India’s FDI landscape has expanded significantly over the past 25 years, with total FDI inflows rising from USD 4 billion in FY2000-01 to around USD 95 billion in FY2025-26. FDI equity inflows increased from USD 2 billion to USD 59 billion during the same period.

Between FY2000-01 and FY2025-26, India received cumulative FDI inflows of USD 1.16 trillion, including USD 791 billion in FDI equity, reflecting the country’s growing integration with the global economy and gradual liberalisation of its investment regime, reported IANS.

Focus On Investor Aftercare, Ease Of Doing Business

“India has built a strong foundation for attracting Foreign Direct Investment. The next phase should focus on making it easier for investors to establish, operate and expand businesses in India, while strengthening the wider economic benefits of such investments,” said Nirmal Minda, President, Assocham.

The working paper recommended strengthening investor aftercare, improving single-window approval systems and reducing bottlenecks related to land availability and costs, logistics, utilities, compliance and access to finance.

It also called for greater coordination between Central and state governments and the development of ready-to-invest infrastructure.

FDI Can Deepen Domestic Value Addition

The study said FDI has become an important component of India’s development across services, manufacturing and emerging sectors.

Services and computer software and hardware account for nearly one-third of cumulative FDI equity inflows, while automobiles, pharmaceuticals, chemicals, infrastructure, electronics and renewable energy have also attracted significant investment.

According to Dr SP Sharma, Chief Economist, Assocham, the broader impact of FDI depends on the extent to which investments generate domestic value addition, employment, exports, technology transfer and linkages with Indian enterprises.

Push For Technology, R&D Investments

The study recommended greater emphasis on technology- and research and development-oriented investments to maximise the long-term economic impact of FDI.

It also called for policies that encourage stronger integration between foreign investors and Indian companies, alongside improvements in infrastructure and business operating conditions.

The recommendations are aimed at ensuring that FDI contributes not only to capital formation but also to technology, exports, employment and deeper integration of Indian enterprises into global value chains.

(KNN Bureau)