India recorded strong FDI growth in FY 2025, driven by major reforms like the EFTA agreement, new labour codes, and SEBI’s SWAGAT framework. These changes are strengthening investor confidence and positioning India as a long-term global investment hub
India recorded foreign direct investment inflows of USD 50.01 billion in FY 2024-25. That marks a 13 percent rise over the previous year’s USD 44.42 billion. Total FDI, including reinvested earnings and other capital, touched USD 81.04 billion. That is the highest in three years.
The Ministry of Commerce and Industry did not hold back in its assessment. “These trends reaffirm India’s position as a preferred global investment hub,” the ministry said, citing continued policy reforms, an evolving business ecosystem, and growing global investor confidence.
Singapore led all source countries with USD 14.94 billion in inflows. Mauritius followed with USD 8.34 billion. The US contributed USD 5.45 billion. The services sector saw FDI rise to USD 9.34 billion in 2024-25, against USD 6.64 billion the year before. Manufacturing FDI grew 18 percent to USD 19.04 billion. Maharashtra and Karnataka jointly absorbed 51 percent of total inflows.
The numbers tell only part of the story. Three structural reforms are now quietly rewriting how foreign capital enters and stays in India.
EFTA TEPA: A Trade Deal Unlike Any Other
The India-EFTA Trade and Economic Partnership Agreement came into force on October 1, 2025. It covers Switzerland, Norway, Iceland, and Liechtenstein. It is India’s first FTA with developed European economies.
What makes it historic is not the tariff cuts. It is the pledge. The TEPA committed USD 100 billion in investments and one million direct jobs over a period of 15 years. It is the first binding pledge of its kind in any Indian FTA.
Commerce Minister Piyush Goyal has spoken plainly about what this means. “The agreement has created an investment pathway with a legally binding investment commitment of $100 billion over 15 years, with the potential to create one million direct jobs,” Goyal said on X.
The early signals are positive. Iceland has already invested USD 30 million in Maharashtra’s fisheries sector. At the ASSOCHAM session marking two years of the agreement, Goyal went further. “For the first time ever, a Free Trade Agreement includes a legally binding commitment of USD 100 billion in investments and the creation of one million jobs in India,” he said.
Prime Minister Narendra Modi framed this as part of a larger shift in India’s trade DNA. “The fact that India now has FTAs with 38 countries reflects a major shift in the country’s trade strategy,” Modi said.
Labour Codes: 29 Laws Into Four
For decades, foreign businesses complained about India’s labour law maze. On November 21, 2025, the government dismantled it. India’s four new labour codes became effective on November 21, 2025, consolidating 29 fragmented laws into a unified framework.
The four codes cover wages, social security, industrial relations, and occupational safety. A single registration, single licence, and single return now replace multiple filings.
The International Labour Organization (ILO) took note. The codes seek alignment with ILO principles on wages, gender equality, and occupational safety. According to ILO, over 2.78 million workers die annually from occupational accidents and diseases, highlighting the relevance of OSH provisions.
KPMG analysts sum up the business case succinctly. From a business perspective, simplified and digitised compliance will reduce administrative burden and litigation risk, improving investor confidence.
SEBI’s SWAGAT Gateway: Rolling Out the Red Carpet
India’s capital markets regulator moved in parallel. SEBI introduced the Single Window Automatic and Generalised Access for Trusted Foreign Investors framework, or SWAGAT-FI, in December 2025.
The framework targets sovereign wealth funds, central banks, government-owned funds, multilateral agencies, and regulated insurance and pension funds. As of June 30, 2025, India had 11,913 registered FPIs holding assets worth Rs 80.83 lakh crore. SWAGAT-FIs are estimated to contribute more than 70 percent of total FPIs’ assets under custody, according to SEBI data.
The mechanics are straightforward. Eligible investors can register as both FPIs and FVCIs through a single process. KYC review and fee-payment cycles stretch to ten years from the earlier three to five years. These amendments represent a strategic overhaul of India’s foreign investment framework, positioning SWAGAT-FI as a unified, interoperable registration mechanism that offers trusted foreign investors a simpler, more predictable and streamlined regulatory pathway to access Indian markets.
A Structural Story, Not Just a Headline Number
PM Modi framed 2025 as a year of structural change. Speaking at the India-France CEO Forum, he drew the clearest line between reform and result. “Our identity on the global stage is that today, India is rapidly becoming a preferred global investment destination. By following the path of Reform, Perform, and Transform, India has emerged as the world’s fifth-largest economy,” said PM Modi.
The USD 50 billion figure reflects that momentum. But what EFTA’s binding commitment, four consolidated labour codes, and SEBI’s SWAGAT gateway collectively signal is something more durable: India is no longer just competing for FDI. It is building the architecture that makes investors want to stay.
Clear Cut Research Desk
New Delhi, UPDATED: March 24, 2026 02:00 IST
Written By: Ayushman Meena
