According to www.india-briefing.com, India’s foreign direct investment (FDI) inflows reached approximately US$50.01 billion in the financial year (FY) 2024–25 — a 13 percent increase over FY 2023–24. This growth positions India as a leading global investment destination amid shifting supply chains and intensified policy competition across Asia.
Key 2025 FDI Policy Updates
Indian policymakers emphasize that the country’s FDI framework remains under continuous review to ensure global competitiveness. Five key themes define India’s evolving FDI landscape in 2025:
Insurance Sector Liberalization
In the Union Budget 2025, the central government announced its intention to raise the foreign ownership limit in the insurance sector from 74 percent to 100 percent, subject to conditions such as mandatory domestic investment of premium income and enabling legislative amendments. A bill to enable this increase was introduced in Parliament in December 2025. If enacted, the reform would permit full foreign ownership of insurance companies, facilitate joint-venture buyouts, and support capital deepening in a capital-intensive sector critical to India’s long-term financial resilience.
Investment Protection and Screening
- Revamp of India’s Model Bilateral Investment Treaty (BIT): The 2025 Budget announced plans to update India’s 2015 Model BIT to strike a more balanced, investor-friendly approach while preserving regulatory safeguards.
- Shift toward country-specific investment treaties: India confirmed future agreements will increasingly be negotiated on a country-specific basis rather than through a single standardized template — enabling tailored protections aligned with strategic bilateral relationships.
Foreign-Owned and Controlled Entities (FOCE) Framework
Introduced by the Union Finance Ministry and operationalized via regulatory clarifications from the Reserve Bank of India (RBI), the FOCE framework reclassifies certain Indian entities as foreign-controlled for compliance purposes — even where ownership structures are indirect. Following updates in early 2025, the RBI expanded the definition of “control” to capture indirect foreign influence through layered ownership structures, offshore vehicles, or trusts.
As a result, Indian entities designated as FOCEs must comply with India’s FDI regime for specified corporate actions — including restructurings, intra-group transfers, and downstream investments — which may now trigger sectoral caps, pricing guidelines, and approval requirements. Key features include:
- Expanded definition of control: assessed not only through direct shareholding but also indirect or ultimate foreign influence
- Downstream investment implications: FOCE-classified entities must apply FDI rules when investing into other Indian companies
- Enhanced compliance and reporting: Share transfers, restructurings, and internal reorganizations within FOCE structures are subject to stricter reporting and approval processes
In effect, the FOCE framework ensures that Indian companies under foreign control — whether direct or indirect — are treated on par with foreign investors for regulatory purposes, closing avenues for indirect entry into restricted or sensitive sectors.
Clarifications for FDI-Prohibited Sectors
On April 7, 2025, the Department for Promotion of Industry and Internal Trade (DPIIT) clarified that companies operating in FDI-prohibited sectors may issue bonus shares to existing non-resident shareholders, provided ownership percentages remain unchanged. Subsequently, amendments to the Foreign Exchange Management (Non-Debt Instruments) Rules granted explicit statutory backing and retrospective validation to this position — removing ambiguity and mitigating legacy enforcement risk.
Market Access Facilitation: SWAGAT-FI
On August 1, 2025, the Securities and Exchange Board of India (SEBI) introduced the SWAGAT-FI (Single Window Automatic and Generalized Access for Trusted Foreign Investors) framework as a market access facilitation initiative. A consultation paper proposed a streamlined registration and know-your-customer (KYC) process across the Foreign Portfolio Investor (FPI) and Foreign Venture Capital Investor (FVCI) routes, aiming to reduce duplication and accelerate onboarding timelines.
On December 1, 2025, SEBI formally notified the SWAGAT-FI regulations. Effective from June 1, 2026, the framework will function as a unified digital gateway for eligible foreign investors, enabling single-window onboarding and compliance — expected to reduce onboarding friction and enhance transaction efficiency.
Source: www.india-briefing.com
Compiled from international media by the SCI.AI editorial team.
