Terrain changed, need to up our game to court FDI: CEA Nageswaran

Government reviewing FDI policies as net inflows stay muted; manufacturing push and policy reforms key to attracting investment

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India needs to “up its game” in order to court foreign direct investment (FDI) into the country as geopolitical and geo-economic terrain have changed since 2023-24, chief economic advisor (CEA) V Anantha Nageswaran said on Wednesday.

 

According to him, since India is a developing country, it will continue to need higher inputs. 

 

“The nature of the terrain has shifted. It has become a much harder terrain (compared to 2014-23). Therefore, we need to up our game with respect to courting FDI, courting global supply chain companies to come here,” said Nageswaran.

 

The CEA was speaking at a conference organised by the Confederation of Indian Industries (CII) on ‘Making India a global foreign investment magnet.’

 

Nageswaran said gross FDI flows may cross $100 billion in FY26 and added that it is imperative for India to 'crack up' the efforts with respect to FDI.

 

He also called for addressing issues related to tax and non-tax, regulatory matters, infrastructure and connectivity issues and single window dimensions. 

 

Data from the Reserve Bank of India (RBI) shows that gross FDI inflows in H1 FY26 increased 16.1 per cent year-on-year (Y-o-Y) to $50.36 billion. Net FDI in India — inflows minus outflows — stood at $7.64 billion during the first half of FY26. 

 

The reason for lower net FDI inflow, according to the CEA, is that developed economies in the last three years saw an “abrupt increase” in interest rates. This has impacted FDI inflows into India. 

 

Meanwhile, outbound investments from Indian entities to developed economies have gone up, “because in order to sell into those markets, you have to be present there these days,” thus reducing the net FDI inflow into India, said Nageswaran.

 

Speaking at the same event, Nidhi Kesarwani, joint secretary at the Department for Promotion of Industry and Internal Trade of India (DPIIT), said the central government is reviewing its FDI policies and the National Manufacturing Mission (NMM) is very futuristic.

 

The government intends to take the manufacturing sector’s share in gross domestic product (GDP) to 25 per cent by 2030, from about 17 per cent currently.

 

“In the past, we have seen that many sectors have been opened up. In the coming days, you'll see many changes in the FDI policies across sectors,” said Kesarwani.

 

Meanwhile, statistics ministry secretary Saurabh Garg said that the National Statistics Office (NSO) plans to hold an economic census 'soon' following the population census. 

 

“Population census has already been announced and we expect to do the economic census in 2027. That would be an appropriate time to look at how we can use this to prepare the statistical business register (SBR). So, that's something on the agenda, if I can put it that way,” he said.