India’s greenfield FDI averages $83 bn annually since 2022, 78% in future-shaping industries: McKinsey

As India focuses on increasing foreign investment in the country, announced ‘greenfield FDI’ – cross-border investment projects that create net new production capacity – into India in 2022-25 (from CY2022 to May 2025) was $83 billion per year, marking an increase of 24% compared to 2015-19, according to a McKinsey Global Institute report on FDI in India and other emerging markets. 

The report highlights that investments in future-shaping industries and resources comprise 78% of the total such FDI announced for India since 2022. The two leading sectors for inward investment are advanced manufacturing and communications and software, together accounting for nearly 50% of announced inflows; these include several automotive and semiconductor megadeals – deals exceeding $1 billion in investment – as well as large data centre investments. 

Past studies have found that greenfield FDI announcements by companies reliably predicted capacity creation on the ground, with realisation rates between 60% and 80%. The analysis does not include other types of FDI, such as mergers and acquisitions.

Europe, the United States and advanced Asia each contributed about 30% to India’s announced inbound greenfield FDI, while such Chinese investment dropped 86% between 2015-19 and 2022-25. Also, announced annual greenfield FDI outflows by Indian firms surged by 64% from $16 billion in 2015-19 to $26 billion in 2022-25, with clean energy and material deals in the Middle East and North Africa (MENA) signalling new investment corridors.

Here are the key findings of the research:

1. FDI promises to mould the industries of the future: Announced FDI flows increasingly target industries that will shape the global economy and the resources that power them. Future-shaping industries include data centres powering artificial intelligence (AI), semiconductor fabrication facilities (fabs), electric vehicle (EV) and battery manufacturing facilities, and a range of other advanced manufacturing from pharmaceuticals to robots. 

2. Multinationals are investing big and increasingly along geopolitical lines: Greenfield FDI announcements have increasingly tracked geopolitical alignments. Advanced economies’ investment in China fell from 10% to 2% of total FDI announcements by value. India’s pattern has been slightly different: While some companies increased their investments and others decreased them, the overall effect was that India maintained strong investment relationships across different geopolitical regions.

3. Shifts in FDI announcements today may shape industry dynamics tomorrow: FDI is shifting the global footprint of future-shaping industries and the cross-border ties that connect countries and regions. Some economies that have long relied on imports for key products like semiconductors or batteries may instead see large boosts in their domestic capacity, a development that could have a cascading impact on trade flows.

4. Shaping economic competitiveness: Historically, emerging Asia has attracted roughly half of all FDI announcements flowing into emerging economies. In the period since 2022, announced FDI inflows into emerging Asia have fallen 10% from the 2015 to 2019 period. At the same time, inflows destined for future-shaping industries nearly doubled as multinational corporations looked to diversify the base of their supply chains. “India and Malaysia have been noteworthy beneficiaries: Together they account for over 60% of announced inflows in future-shaping industries across emerging Asia,” says the report. 

5. Navigating FDI signals and trade shifts: FDI announcements also highlight specific corridors that may experience accelerated growth, making them proportionately safer bets for stakeholders such as logistics providers and shipping companies or for firms providing payments and trade finance. For example, companies in Japan and South Korea have announced new, large projects in India’s automotive sector for electric vehicle assembly and battery manufacturing.