Foreign direct investment (FDI) into India climbed 6 per cent to $19.81 billion in the April-June quarter of 2026-27, up from $18.62 billion in the same period of the previous financial year, according to figures compiled by the Department for Promotion of Industry and Internal Trade (DPIIT). The rise came despite continued global uncertainties, signalling sustained investor confidence in the Indian economy.

When reinvested earnings and other capital are included, total FDI rose a sharper 22 per cent to $30.65 billion during the first quarter of 2026-27 — a headline figure that reflects the breadth of foreign commitment beyond fresh equity alone.

Month-wise Trend: April Surge, Mid-Quarter Dip

The quarter's trajectory was uneven. FDI inflows nearly doubled in April 2026 to $12.1 billion from $6.6 billion in April 2025, driving much of the quarterly gain. Inflows then softened sharply in May to $2.8 billion before partially recovering to $4.91 billion in June. The April spike suggests a concentration of large deal closures at the start of the financial year rather than a broad-based acceleration.

Japan Displaces Traditional Leaders as Top Investor

Japan emerged as the single largest source of FDI during the quarter, contributing $5.71 billion — a figure likely influenced by large infrastructure or manufacturing-related commitments. Singapore followed at $5.22 billion, maintaining its position as a key conduit for South-East Asian capital. The rest of the top-six were Mauritius ($2.31 billion), the Netherlands ($1.38 billion), the United States ($1.34 billion), and the UAE ($868 million).

Notably, US FDI declined by over 76 per cent year-on-year — from $5.61 billion in April-June 2025-26 to $1.34 billion in the corresponding period of 2026-27. Inflows from the UAE also dipped, falling from $1 billion to $868 million. The US decline is the most striking data point in the release and warrants scrutiny, given that it comes amid ongoing India-US trade negotiations.

Sectors Attracting the Most Capital

The services sector attracted the highest inflows at $7.04 billion, reaffirming India's positioning as a global services hub. Computer software and hardware drew $2.84 billion, followed by trading at $1.92 billion, non-conventional energy at $1.24 billion, and the automobile sector at $622 million. The clean energy figure, while modest in absolute terms, reflects a continuing diversification of FDI away from traditional sectors.

Tamil Nadu Leads States; Maharashtra, Delhi Follow

Tamil Nadu topped the state-wise rankings, attracting $5.95 billion in the first quarter — a notable shift that underscores the state's aggressive investment-promotion efforts and its manufacturing base. Maharashtra ranked second at $4.22 billion, followed by Delhi ($2.67 billion), Karnataka ($2.11 billion), and Gujarat ($1.3 billion). This is the first quarter in recent memory where Tamil Nadu has led the table over Maharashtra, historically the dominant destination for FDI.

With India continuing to position itself as a manufacturing and services alternative amid global supply-chain realignment, the full-year FDI trajectory will depend heavily on how bilateral trade frameworks — particularly with the US — evolve in the months ahead.