A lazy narrative has followed India around the world's financial pages: that the great China-plus-one bus came through Asia, stopped in Hanoi and Bangkok, and left New Delhi standing at the kerb.
The 2026 evidence—from the United Nations, from a survey of over 500 global executives, and from the government’s economists—tells a subtler story. India was not waiting for that bus. It was building the bus stop. And the buses that matter most have only now begun to run.
In 2025-26, gross foreign direct investment (FDI) into India rose 17.3% to $94.5 billion, while global flows of FDI rose just 6% in 2025 to about $1.6 trillion, according to UN Trade and Development (UNCTAD) data. Developing economies as a group managed only 2% growth.
UNCTAD’s World Investment Report names India’s Production-Linked Incentive schemes, National Single Window System, India Industrial Land Bank and Project Development Cells among reasons for the performance. The report also describes India as an emerging industrial base in the global reorganization of production.
In Kearney’s January 2026 survey of 507 senior executives, 40% named the talent and skill of India’s labour pool as the strongest reason to invest there, the highest talent score of all 25 markets ranked.
Also, technological capability overtook regulatory efficiency this year as the single most important factor in global investment decisions. The conclusion: the world’s capital has changed its compass and the needle points at what India has spent a generation producing—engineers.
Much investment is technology related. Google’s $14.5 billion commitment to Indian digital infrastructure exemplifies the pattern. Information and Communication Technology was the country’s largest sector for new announcements; UNCTAD ranks India among the world’s top destinations for AI infrastructure.
Sceptics call this the wrong kind of investment. Data centres, they note, employ hundreds while factories employ tens of thousands. The point is fair. But it mistakes a beachhead for a destination.
India is on the global tech map—one of the few developing economies that can offer the AI economy scale, skills and a billion-plus-user market at once.
Job generating waves of electronics, components and green manufacturing are likely to follow.
Not that the ledger is clean. Announced greenfield investment in manufacturing moderated from about $65 billion to $27 billion in 2025—although project counts barely fell, and UNCTAD lays the caution at the door of global tariff turmoil rather than anything Indian.
The government’s Economic Survey had a section on FDI that concedes that inflows “remain below their potential,” studies how Vietnam and Malaysia win deals through empowered investment authorities operating at the prime-ministerial level, and proposes that every policy change in the country must pass a test of predictability.
This is a sign of a government looking to attract more FDI. It has shown impressive policy flexibility. When tariff shocks threatened exporters in 2025, it responded with a Credit Guarantee Scheme for Exporters, even as the Reserve Bank of India announced relief measures. UNCTAD cites these—alongside steps by Brazil and South Africa—as a model of how states stop temporary turbulence from deterring investment.
India needs a tariff and customs policy stable enough for an investor to underwrite a 30-year bet, with clarity on government clearances.
Even the most-cited worry—of high outward FDI with Indian firms investing abroad—reads differently in historical light. Japanese and Korean companies globalized at precisely this stage of their economy’s rise, buying technology, brands and distribution networks. The survey calls it internationalization. Indian businesses are acquiring a global footprint, which is what a manufacturing powerhouse requires.
The survey suggests that 88% of global investors plan to increase FDI over the next three years. Supply chains are being realigned and capital is coming to Asia—it will settle where talent, returns and predictability meet.
India already owns the first two outright; the third can be a policy assurance. The early buses went to Bangkok and Hanoi, carrying the light industries of the last era.
The heavier traffic of the next one—AI, electronics, green manufacturing—is just leaving the depot. India spent a decade building the stop for it to pull in. Now it needs to stand still, in policy terms, for the driver to see it.
The author is assistant professor of economics at Zakir Husain Delhi College (Evening), University of Delhi.