India draws $351 billion in greenfield FDI, outpaces China

In the fiscal year 2021-25, India attracted a staggering $351 billion in foreign direct investment (FDI) for greenfield projects, more than double the amount received by China during the same period, according to the Boston Consulting Group (BCG). This marked a 61% surge in India's greenfield FDI, up from $222 billion over the previous five years. However, China experienced a 54% drop in FDI for newer ventures, with investments falling from $350 billion to $159 billion in the same timeframe, according to BCG data.

Nikolaus Lang, managing director and senior partner at BCG, highlighted India as the primary destination for investors amidst a global realignment. Lang emphasized the need for sustained focus on infrastructure development, skilling, and cost competitiveness to enhance India's manufacturing footprint worldwide. He noted that investor concerns about China are driving capital towards India and other Southeast Asian markets, such as Malaysia, Indonesia, Thailand, Vietnam, and the Philippines.

Greenfield FDI in Malaysia surged 125% to $140 billion, in Indonesia by 34% to $133 billion, and in Thailand by 97% to $56 billion during the five years leading up to 2025. Conversely, greenfield FDI in Vietnam (-12%) and the Philippines (-24%) declined during the same period. Lang explained that, in light of geopolitical uncertainties, multinational corporations are shifting their supply chain strategies from relying on a single supplier to implementing dual or triple sourcing.

For India to attract more industries, Lang stressed the importance of mobilizing capital, developing a skilled workforce, and implementing a demand stimulus. He pointed out that the lack of a proficient workforce capable of handling stamping, painting, assembly, mechatronics, and other manufacturing processes could hinder India's ability to localize industries.

Lang also emphasized the significance of India's vast local market, stating that it presents a worthwhile opportunity for investment. He mentioned that Southeast Asian countries, including the Philippines and Vietnam, have benefited from the "China Plus One" strategy devised by multinational corporations in the aftermath of the pandemic.