US Capital Moves Up India’s FDI Rankings

The United States has overtaken Mauritius to become India’s second-largest source of foreign direct investment, marking a notable shift in the geography of capital entering the country. Equity inflows from the US more than doubled to exceed $11bn in 2025-26, while Singapore retained the top position as India’s largest FDI source.

The movement matters because Mauritius has long been central to India’s investment flows, partly because earlier corporate structures often routed capital through tax-friendly jurisdictions. The US rise suggests a larger share of investment is now arriving more directly, giving the shift a strategic as well as statistical significance.

The latest inflows sit within a broader recovery in India’s foreign investment picture. Gross FDI inflows rose 16.7% to a record $94.5bn in 2025-26, the fastest growth in six years and a reversal after several years of weaker momentum. That improvement comes despite a period in which portfolio flows have been more volatile, making direct investment a more important signal of longer-term confidence.

Sector patterns point to continued interest in areas linked to India’s production and infrastructure ambitions. Food processing, computer hardware and shipping are among the sectors seeing development, while Japanese investment has also increased, supported by large transactions in financial services. The combined picture is of an FDI base that is becoming less dependent on legacy routing centres and more reflective of direct corporate positioning.

India’s capital story is therefore becoming more nuanced. The headline rise in US investment strengthens the case for India as a destination for strategic capital, but it also changes how inflows should be read: not only by volume, but by source, sector and staying power. For policymakers and investors, the composition of FDI may now matter as much as the record total.