Economic Survey 2026: Why India's FDI lags Malaysia, Thailand, Vietnam

Economic Survey 2026 points to Vietnam, Thailand, Taiwan, Australia, Malaysia and the Philippines to show how speed, certainty and coordination attract capital

The Economic Survey 2025–26, tabled in Parliament on Thursday, had a blunt message on foreign direct investment (FDI): Inflows are still running below potential even as India projects stability, macroeconomic strength, sustained growth and a large market. It pointed to Vietnam, Malaysia, Thailand, Taiwan, Australia and the Philippines as examples of how countries are pulling in multinational capital while India’s inflows remained below potential.

 

The Survey said foreign investors continue to respond more strongly to speed, predictability and high-level political backing than to a spread of overlapping incentives. The message was: Borrow what works elsewhere, but avoid scattering policy effort across too many schemes.

 

Prepared under Chief Economic Adviser V Anantha Nageswaran, the Survey framed FDI less as a headline number and more as a way to finance long-gestation infrastructure and manufacturing projects that domestic capital alone may struggle to support.

 

Connector countries and export platforms

 

Across its global examples, the Survey described how several emerging economies have positioned themselves as “connector countries” in a period of shifting supply chains and tariff risks. These countries focus on becoming reliable export platforms, where firms can serve multiple markets with minimal friction.

 

Rather than relying only on tax concessions, they combine targeted incentives with fast approvals, integrated infrastructure and senior-level oversight to land anchor investors.

 

Vietnam: Fast-track approvals and trade access

 

Vietnam featured prominently in the Survey’s examples. Beyond tax incentives, it has leaned on industrial zones and an extensive network of free trade agreements to attract export-oriented manufacturers.

 

A recent change cited in the Survey was Decree 19/2025/ND-CP, which introduced a special investment procedure to streamline licensing for selected projects. The fast-track route is geared towards higher-quality and high-technology investments, with defined timelines and simplified clearances.

 

The Survey pointed out that the formalisation of this process has helped change investor expectations around speed and certainty.

 

Thailand: Centralised investment authority

 

Thailand’s approach centres on its Board of Investment, which functions as a single authority granting incentives and handling approvals. This is paired with large, corridor-style initiatives such as the Eastern Economic Corridor.

 

According to the Survey, this structure helps shorten decision cycles and gives investors clarity on import duty exemptions, tax concessions and other benefits tied to promoted projects.

 

Taiwan: Financing support alongside facilitation

 

Taiwan’s model blends single-window handling with direct financial support. The Survey noted the use of low-interest loans, subsidies and tax breaks to support capital-intensive manufacturing.

 

This mix is designed to make it easier for firms to both set up and scale operations, particularly in advanced manufacturing segments.

 

Australia: Linking investment to talent pipelines

 

Australia’s recent investment pitch has been closely tied to talent and priority processing. The Survey referred to the Global Business and Talent Attraction Taskforce as a vehicle to attract high-value businesses and specialised professionals in targeted industries.

 

This runs alongside visa pathways such as the Global Talent visa, which are used to support firms bringing in senior leadership and niche expertise.

 

Malaysia: Golden Pass for founders and investors

 

Malaysia has taken a more explicit route by using immigration facilitation as part of its investment strategy. The Survey cited the country’s Golden Pass scheme, which targets unicorn start-ups and venture capitalists.

 

The scheme bundles streamlined processes with concessions such as exemptions on employment-pass fees and other facilitation measures, making it easier for founders and investors to base operations in the country.

 

Philippines: Investment-linked special visas

 

In the Philippines, the CREATE MORE Act has tied investment promotion to talent mobility. Under the framework referenced in the Survey, investment promotion agencies can issue special visas to foreign nationals with highly specialised skills or executive responsibilities.

 

The idea is to give firms confidence that leadership hiring and specialist movement will not become bottlenecks once investment decisions are made.

 

R&D and sector-focused incentives

 

Another pattern running through the Survey’s examples is a focus on sector-specific inducements rather than broad-based benefits. Fast-track licensing in Vietnam is linked to “high-quality” capital, while other countries are encouraging research and development centres in areas such as semiconductors and artificial intelligence.

 

The Survey suggested that this approach helps build domestic capability while anchoring firms deeper into local supply chains.

 

What the Survey suggests for India

 

Drawing from these cross-country playbooks, the Survey laid out a more managerial approach for India, centred on coordination, speed and focus.

 

It pointed to four areas where changes could make a difference:

 

• Formal fast-track routes for clearly defined priority projects, with fixed timelines and escalation authority.

• Tighter, outcome-linked incentives for a small set of export-oriented sectors such as semiconductors, electronics and energy transition supply chains.

• Visible Centre–State coordination led at a senior level, so large investors see continuity and problem-solving capacity.

• Talent mobility treated as part of the investment offer, with sector-linked facilitation for senior specialists and project-critical skills.

 

The Survey noted that inflows have shown some improvement but still need momentum. RBI data cited in the Survey put FY25 gross FDI inflows at $81 billion, up 13 per cent from $71.3 billion in FY24, suggesting that better process and policy certainty can lift numbers, but not yet at a scale that matches India’s infrastructure ambitions.