China Has Not Been a Major Source of FDI into India

Between April 2000 and March 2025, Chinese investment in India amounted to just $2.5 billion, representing only 0.3 percent of total inflows. According to data from the High Commission of India, this places the world power at 23rd place among all foreign investors.

This is partly due to restrictions India put on its land border neighbors from being able to spend FDI in the country. The move was intended to stop "opportunistic takeovers" of Indian companies, particularly following the economic impacts of the Covid-19 pandemic. In the wake of deadly clashes in the disputed Himalayan region between India and China, Beijing was no longer able to enjoy access to FDI flows into India through an automatic route, but instead all investments had to be signed off on by India’s home and foreign ministries.

The debate over China’s access to Indian markets is resurfacing, however, as Indian thinktank NITI Aayog recently called for Delhi to ease the FDI restrictions on China in order to boost investment in India, according to reporting by Reuters. While India keeps tight controls on sectors such as defense and media, it remains broadly open to foreign investment in areas including manufacturing, services, and pharmaceuticals.

Meanwhile, other countries continue to dominate India’s FDI flows. As the following chart shows, Mauritius has been the single largest source of investment since 2000, contributing more than $180 billion, or about a quarter of India’s total inflows.

Singapore follows closely behind with $175 billion, or 24 percent of the total FDI since 2000. It even topped the list for FY2024-25, sending $14.9 billion in investments (while Mauritius invested $8.3 billion that year). The United States comes in third place overall, with $70.7 billion invested in India over the 25 years, including $5.5 billion in FY2024-25. Other key investors include the Netherlands, Japan, the United Kingdom, the UAE and the Cayman Islands. Overall, India’s foreign direct investment inflows reached more than $81 billion in FY2024-25.