India Draws $19.81 Billion FDI In Q1, Japan Overtakes US As Top Investor

Foreign direct investment (FDI) into India rose 6 per cent to USD 19.81 billion in the April-June quarter of 2026-27, but the headline growth masked a sharp shift in the sources of foreign capital, with inflows from the US plunging by more than 76 per cent during the period.

According to data from the Department for Promotion of Industry and Internal Trade (DPIIT), India had received USD 18.62 billion in FDI during the corresponding quarter of 2025-26.

The quarterly increase was driven largely by a sharp jump in April, when FDI nearly doubled to USD 12.1 billion from USD 6.6 billion a year earlier. The momentum, however, weakened significantly in the following two months. Inflows fell more than 45 per cent year-on-year to USD 2.8 billion in May and declined around 29 per cent to USD 4.91 billion in June.

The investor mix also changed substantially. Japan emerged as the largest source of FDI, investing USD 5.71 billion during the quarter, followed by Singapore at USD 5.22 billion. Mauritius contributed USD 2.31 billion, the Netherlands USD 1.38 billion and the US USD 1.34 billion. The UAE accounted for USD 868 million.

US investment stood at USD 1.34 billion, sharply lower than the USD 5.61 billion recorded in April-June 2025-26. UAE inflows also declined, falling from USD 1 billion in the year-ago quarter.

Services remained the biggest recipient sector, attracting USD 7.04 billion, followed by computer software and hardware at USD 2.84 billion. Trading received USD 1.92 billion, while non-conventional energy attracted USD 1.24 billion and the automobile sector USD 622 million.

The broader foreign investment picture was stronger when reinvested earnings and other capital were included. Total FDI rose about 22 per cent to USD 30.65 billion during the quarter.

At the state level, Tamil Nadu received the highest FDI at USD 5.95 billion, followed by Maharashtra at USD 4.22 billion, Delhi at USD 2.67 billion, Karnataka at USD 2.11 billion and Gujarat at USD 1.3 billion.

The data therefore points to a mixed first-quarter picture: overall FDI remained higher than a year ago, but monthly flows were uneven and the sharp fall in US investment indicates a significant change in the composition of foreign capital entering India.