India FDI policy must deepen economic integration, says Assocham study
Synopsis
India has drawn $1.16 trillion in cumulative FDI over 25 years — but Assocham argues that headline numbers mask a deeper gap: investment that arrives without embedding itself in domestic value chains, technology transfer, or employment generation. The chamber's new working paper is a call to shift India's FDI strategy from attraction to integration.
Key Takeaways
Assocham released a working paper on 21 February calling for deeper integration of FDI with India's economic and industrial ecosystem.
Total FDI inflows rose from $4 billion in FY2000-01 to $95 billion in FY2025-26 , per DPIIT/RBI data.
India received a cumulative $1.16 trillion in FDI and $791 billion in FDI equity over 25 years .
Services and software account for nearly one-third of cumulative FDI equity inflows.
Key recommendations include improving the single-window process , reducing land costs, upgrading logistics, and better Centre-state coordination .
Assocham Chief Economist Dr SP Sharma stressed that FDI's real impact depends on domestic value addition, employment, and technology linkages.
India's foreign direct investment (FDI) policy must evolve beyond merely attracting capital and focus on creating conditions in which investment can be sustained, expanded, and more deeply integrated with the country's economic and industrial ecosystem, according to a working paper released by the Associated Chambers of Commerce and Industry of India (Assocham) on Monday, 21 February.
25 Years of FDI Growth
The report places the recommendation in the context of a dramatic transformation in India's FDI landscape over the past two and a half decades. According to official DPIIT and Reserve Bank of India (RBI) data cited in the study, total FDI inflows rose from $4 billion in FY2000-01 to approximately $95 billion in FY2025-26, while FDI equity inflows climbed from $2 billion to $59 billion over the same period. Cumulatively, India attracted $1.16 trillion in total FDI and $791 billion in FDI equity between FY2000-01 and FY2025-26.
The study attributes this trajectory to India's gradual integration with the global economy and the progressive liberalisation of its FDI regime — a trend that has accelerated through multiple rounds of sector-specific reform.
What the Paper Recommends
'India has built a strong foundation for attracting Foreign Direct Investment. The next phase should focus on making it easier for investors to establish, operate and expand businesses in India, while strengthening the wider economic benefits of such investments,' said Nirmal Minda, President, Assocham.
The working paper's key prescriptions include strengthening investor aftercare, streamlining the single-window approval process, reducing land costs and improving availability, upgrading logistics and utilities infrastructure, easing compliance burdens, improving access to finance, promoting technology and research-and-development-oriented investment, developing ready-to-invest infrastructure, and enhancing coordination between the Centre and state governments.
Sectors Driving FDI Equity
The Assocham paper notes that services and computer software and hardware together account for nearly one-third of cumulative FDI equity inflows — underscoring India's comparative strength in knowledge-intensive sectors. Significant investment has also flowed into automobiles, pharmaceuticals, chemicals, infrastructure, electronics, and renewable energy.
The paper highlights that FDI supports development by bringing capital, technology, global market access, and international business linkages. However, the breadth of its impact depends on how effectively that investment generates domestic value addition, employment, exports, and technology transfer.
The Ecosystem Imperative
'Its wider impact depends on how much investment creates domestic value addition, employment, exports, technology and linkages with Indian enterprises,' said Dr SP Sharma, Chief Economist, Assocham.
This comes amid a broader global competition for manufacturing and services FDI, with countries such as Vietnam, Indonesia, and Mexico increasingly positioning themselves as credible alternatives to China. Notably, India's ability to capture next-generation FDI — in semiconductors, clean energy, and advanced manufacturing — will depend heavily on the structural reforms the paper calls for.
What Comes Next
The Assocham recommendations are expected to feed into ongoing policy consultations between the industry body, the Department for Promotion of Industry and Internal Trade (DPIIT), and state investment promotion agencies. How much of the agenda is translated into binding reform will be a key test of India's ambition to sustain FDI momentum beyond the current cycle.
Point of View
But Assocham's paper quietly surfaces an inconvenient truth: volume has outrun depth. Much of that capital has concentrated in services and software — sectors that generate limited downstream linkages — while manufacturing FDI remains hostage to land, logistics, and compliance friction that successive governments have pledged but struggled to resolve. The single-window promise, in particular, has been made and remade for over a decade. What the paper does not fully confront is the Centre-state tension at the heart of investor aftercare — states compete fiercely for announcements but diverge sharply on implementation. Until investment outcomes are measured and published with the same rigour as inflow figures, India risks optimising for the optics of attraction rather than the substance of integration.
NationPress
21 Sept 2026
Frequently Asked Questions
What does the Assocham FDI working paper recommend?
The Assocham working paper recommends that India shift its FDI strategy from attraction to integration, focusing on investor aftercare, a streamlined single-window approval process, reduced land costs, better logistics and utilities, eased compliance, technology-oriented investment promotion, and improved Centre-state coordination.
How much FDI has India received in the past 25 years?
According to DPIIT and RBI data cited in the study, India received a cumulative $1.16 trillion in total FDI and $791 billion in FDI equity between FY2000-01 and FY2025-26. Annual total inflows grew from $4 billion to approximately $95 billion over the same period.
Which sectors have attracted the most FDI equity in India?
Services and computer software and hardware together account for nearly one-third of cumulative FDI equity inflows. Other significant recipients include automobiles, pharmaceuticals, chemicals, infrastructure, electronics, and renewable energy.
Why does Assocham say attraction alone is not enough?
Assocham argues that FDI's wider development impact depends on how much investment creates domestic value addition, employment, exports, and technology linkages with Indian enterprises — outcomes that do not automatically follow from high inflow numbers.
Who released the FDI working paper and when?
The working paper was released by the Associated Chambers of Commerce and Industry of India (Assocham) on 21 February, with remarks from Assocham President Nirmal Minda and Chief Economist Dr SP Sharma.
