Foreign direct investment (FDI) in India – upcoming sectors
Mulraj Chheda
by Mulraj Chheda
India once approached foreign investment in its strategic sectors with marked caution, allowing limited access to safeguard national interests. Now ranked as the world's fourth-largest economy, India's economic rise calls for a reimagined foreign direct investment (FDI) approach. Today, 100% FDI is allowed under the automatic route in multiple high-impact sectors, signalling both economic confidence and strategic ambition.
This evolving landscape presents unprecedented opportunities for global investors. Based on our sectoral insights, we have identified eight industries poised to drive the next wave of FDI-led growth in India.
Banking, financial services, and insurance (BFSI)
India's financial sector sits at the intersection of scale, technology, and transformation. With the country's expanding middle class, rapid digital adoption, a robust fintech ecosystem, and a pro-reform regulatory environment, the BFSI sector has evolved into one of the most compelling investment stories in India. Within the BFSI sector, India's insurance industry is poised to attract more investments from foreign investors.
Mining and refining
India's mineral wealth is vast, yet significantly underutilised. As the global economy accelerates towards advanced manufacturing, India has positioned its mining and refining sector as a strategic engine for both domestic growth and international supply chains.
For investors, it presents an excellent opportunity to participate in building India's critical minerals infrastructure, which will have downstream integration into refining, processing, and advanced manufacturing.
Manufacturing
The National Manufacturing Mission (NMM) aims to leverage advanced technologies to propel India's micro, small, and medium enterprises (MSME) sector forward. This initiative comes at an opportune moment – considering recent geopolitical shifts, a robust and maturing labour force, and government PLI schemes, India is swiftly positioning itself as the world's next great factory floor.
Civil aviation
India's aviation sector is soaring higher than most anticipated. Fuelled by rising disposable incomes, rapid infrastructure expansion, and bold government initiatives, the industry is on a trajectory that may outpace even the most optimistic projections.
Telecom
India's telecom sector stands at the heart of its digital transformation, marked by rapid infrastructure expansion, policy reform and record data consumption. India boasts over 1,200 million telephone subscribers with a teledensity of around 85%.
The sector continues to experience unprecedented growth. With India's planned 5G rollout gaining momentum and telecom infrastructure strengthening, the sector remains in the top five in attracting foreign investment.
Pharmaceuticals
India has long been recognised as the “pharmacy of the world”, playing a critical role in the global pharmaceutical industry. Around 70% of India's pharmaceutical exports are shipped to highly regulated markets in the US and EU. India is also poised to become the next hub for biopharma research and development (R&D) and clinical trials. Leading global companies are driving FDI in pharmaceuticals for joint ventures and innovation centres in India.
Infrastructure
India is relentlessly pursuing progress, transforming challenges posed by infrastructure gaps into opportunities for innovative solutions and dynamic growth. From roads and highways to ports and shipping, the massive scale of infrastructure development is enhancing private and foreign participation in traditionally public-heavy segments.
Notably, there is a growing shift towards public-private partnerships, viability gap funding and asset monetisation, creating more structured and investor-friendly models across infrastructure projects.
Biotechnology
India's biotechnology sector is advancing beyond traditional pharmaceuticals and vaccines into innovative fields such as genomics, synthetic biology, bio-manufacturing, and precision medicine. The confidence evident in the pharmaceutical industry also applies to biotechnology. The industry, worth USD 165.7 billion in 2024 is taking impressive strides forward.
For investors, biotechnology in India offers the perfect blend of innovative science, supportive policy, and scalable innovation. Whether you're eyeing early-stage ventures or looking to back large-scale bio-manufacturing, the opportunity is not just real – it's accelerating.
Conclusion
India presents a promising outlook for global investors. A vision that incorporates scale, stability, and sector-specific policy clarity. Whether you're seeking high-growth opportunities or stable, asset-backed investments, India's evolving landscape presents a compelling case for every investor.
Mulraj Chheda became a member of The Institute of Chartered Accountants of India in 1993, and has extensive experience in corporate finance and transaction advisory viz. mergers, valuations, debt syndication, business structuring, etc. In addition to corporate finance and transaction advisory, he has also advised a large number of clients in different industries on FEMA, tax structuring, and accounting in various international generally accepted accounting principles (GAAP). Contact Mulraj.
XLNC member firm Chheda & Associates, Chartered AccountantsMumbai, IndiaT: +91 22 25004386
Audit, Accounting, Tax, Corporate Finance, Strategy, Management Consulting
Chheda & Associates, Chartered Accountants was founded in 1993 and has since evolved into a diversified organisation. All professionals at Chheda & Associates are highly qualified and dedicated. Their scope of services includes assurance, accounting advisory, transaction advisory and various other regulatory services from a domestic as well as an international perspective.
