India Retains Foreign Investors; Removes Land And Labor Hurdles
It has eased the regulatory frameworks and implemented a single-window system that provides multiple services
To attract foreign direct investment (FDI) inflows, the Government of India is taking multiple steps at the central and state levels. It is streamlining regulations and offering tailored investment packages and making pitches to global corporations to make it easier for companies to invest in the country.
In the last financial year, the gross FDI into India increased by 13.6 percent to $81 billion. It marked the fastest growth rate since 2019-20.
Despite rising protectionism in the United States and other countries, the government is maintaining the momentum.
Explaining the nuances, Amardeep Singh Bhatia, Secretary for the Department for Promotion of Industry and Internal Trade (DPIIT) said, “There is a lot of work going on with the states; we are nudging and helping them to put in place an easier regulatory framework, decriminalise laws, and have a single window system that is being benchmarked.”
States are encouraged to implement a single-window system to clear investment proposals. It should outline the number of services offered, the time taken for each clearance, and the documents required, and it should be benchmarked against the best-performing structure.
To clear investment proposals, states are encouraged to implement a single window system that outlines the number of services offered, the time taken for each clearance, and the documents required, with each benchmarked against the best-performing systems.
The approach is part of the broader effort to make India a more attractive destination for investment.
Meanwhile, a task force led by Cabinet Secretary TV Somanathan is working with states to remove regulatory hurdles that discourage investors. These include challenges on land use changes, building permissions, labor rules and other local regulations.
One of the key concerns among investors has been access to land for new projects.
Bhatia explained that states were making land available for industrial use, while the Centre supported the efforts through its network of industrial parks and corridors that provide plug-and-play facilities.
The Secretary remarked, “The government is reviewing sectoral FDI regulations to see if the process can be simplified.”
He added that consultations with stakeholders were initiated and the issues raised during the discussions were addressed. To ensure that approvals were granted swiftly, regulators were examining the relevant rules.
Though India has liberal sectoral FDI caps, the official held that the Insurance Regulatory and Development Authority of India (IRDAI) formed a panel to overhaul the current laws, including proposals to permit 100 percent FDI in the insurance sector.
The government’s push to streamline investment processes is happening when US President Donald Trump is hoping to draw more American companies, including large firms such as Apple, back to the US.
Commenting on the impact of the global shifts, the DPIIT Secretary stated, “Companies are working on a resilient supply chain, and a certain portion of the production is naturally coming to India, as it has a large domestic market, which will grow steadily. There is a strong positive interest from investors, translating into greater FDI flows into the country.”
The official added that India was well-positioned to attract investment in manufacturing and research and development.
Pointing to the country’s wide range of available skills, he said, “India has the entire spectrum of skills.”
He apprised that net FDI dropped by 97 percent to $383 million in Financial Year 2025 due to significant outflows. That part of the outflows could be explained by companies repatriating funds after launching initial public offerings (IPOs), while Indian companies were investing more overseas.
Bhatia reasoned, “Indian companies are growing in scale globally, and they are investing abroad to tie up resources, technology, and be part of the global value chain. It will generate more dividends and inflows in the future.”
Thus, despite the current dip in net FDI, the Centre is confident that India’s structural advantages-including its domestic market size, skilled workforce, and ongoing regulatory reforms, will keep the country an attractive destination for foreign investors.