India records 73 percent surge in foreign direct investment in 2025: UNCTAD
United Nations (The Uttam Hindu): Foreign Direct Investment (FDI) in India saw a sharp 73 percent increase in 2025, according to a report by the United Nations Conference on Trade and Development (UNCTAD). India received a total of $47 billion in foreign investment last year. The rise was mainly driven by strong inflows into the services and manufacturing sectors.
UNCTAD stated that the growth in foreign investment was largely due to major investments in the services sector, including financial services, information technology (IT), and research and development. Manufacturing also attracted higher investment, supported by government policies aimed at integrating India into global supply chains.
According to the UN report, India ranked among the fastest-growing destinations for foreign investment globally. The latest edition of the Global Investment Trends Monitor revealed that during the first three quarters of last year, India received $7 billion in data centre investments, placing it seventh worldwide. In the fourth quarter, the data centre sector witnessed a sudden surge in foreign investment, further boosting activity.
In October, Google announced a $15 billion investment to set up an AI hub in Andhra Pradesh. In December, Microsoft declared plans to invest $17.5 billion in AI, cloud infrastructure, and data centres. During the same month, Amazon announced $35 billion in investments in AI and other sectors. According to the UN, these investments will be made gradually over the coming years.
At the global level, foreign direct investment rose 14 percent last year, reaching $1.6 trillion. The report noted that in 2025, data centres emerged as a key driver of global investment, accounting for nearly one-fifth of the total value of new investment projects. Due to rising demand for AI infrastructure and digital networks, announced investments in this sector crossed $270 billion. The semiconductor industry also saw strong growth, with the value of newly announced projects increasing by 35 percent.
However, sectors affected by tariff-related risks saw a 25 percent decline in project numbers, with textiles, electronics, and machinery being the most impacted. UNCTAD reported that developed countries attracted the largest share of foreign investment, with inflows rising 43 percent to $728 billion. In contrast, foreign investment in developing countries declined 2 percent to $877 billion, with India standing out as a notable exception.
The United Nations noted that foreign investment in China declined for the third consecutive year, falling 8 percent to $107.5 billion, although much of the investment remained focused on strategic and fast-growing sectors. UNCTAD said overall investor confidence remains weak globally, warning that headline growth figures do not reflect the full reality. Policymakers were advised to focus on increasing real investment, not just capital flows.
Highlighting weak investor sentiment, the report said the value of international mergers and acquisitions fell 10 percent. International project finance declined for the fourth straight year, with total value down 16 percent and deal numbers falling 12 percent, close to 2019 levels. While announcements of greenfield projects dropped 16 percent, the overall project value remained high due to a few large-scale investments.