Calibrating India’s inbound investment framework

Following the successful 18th BRICS Summit in New Delhi in September, Prime Minister Narendra Modi’s planned December visits to Canada and Brussels, where formal free trade agreements (FTAs) are expected to be signed, signal consistency in institutionalising India’s global economic footprint. The trade push, alongside domestic structural reforms and a new FTA strategy, has changed India’s investment trajectory. Reserve Bank of India data show gross inward foreign direct investment (FDI) reached a record $94.8 billion in FY26. UNCTAD’s World Investment Report 2026 notes India as 11th among the world’s top FDI destinations, following a 44% rise in inflows.Editorial | Building consensus: On the 18th BRICS Summit, the New Delhi DeclarationIndia follows global trendHowever, the report reveals that globally, international project finance remains roughly a quarter below its 2021 peak, a trend India reflects. In greenfield data centre investments (a focal sector across economic partnerships), India attracted approximately $7 billion during the first three quarters of 2025. While this placed India within the top 10, it trailed Thailand and Spain, and sat substantially behind South Korea’s $21 billion, the United States’s $29 billion, and France’s $69 billion. What creates this lag between committed investment and its actual deployment in greenfield projects, particularly in India?Investors believe incremental reform can ease the challenges behind this lag. In some ways, the remaining ‘negotiations’ will be internal — between the Centre and States, between the Department for Promotion of Industry and Internal Trade (DPIIT) and line Ministries, or between central rules and State notifications needed to enforce policy. Crucially, resolving these operational bottlenecks would benefit domestic enterprises as much as foreign investors. Commercial dispute resolution is faster than before, but India’s courts still had nearly 48 million pending cases as of April, including about six million in High Courts. Reforms such as the Commercial Courts Act, 2015 and the Mediation Act, 2023 have helped, with institutional arbitration increasingly becoming the corporate default. Smaller enterprises, however, still rely on courts. Better staffing of commercial benches and mediation centres remains essential to reducing resolution times.Editorial | Mature and pragmatic: On India-EU FTAOn the labour codesThis fragmentation is also mirrored in the rollout of the landmark labour codes. Parliament’s consolidation of 29 central labour laws into four codes was a legislative milestone, with the Central Rules notified in May 2026. But since labour is on the Concurrent List, implementation depends on State notifications. Gujarat moved swiftly to notify rules under all four codes, while other industrial States are finalising theirs. For enterprises designing national human resource frameworks, this necessitates managing a messy transitional phase of varied State timelines.On tax certainty, the Taxation Laws (Amendment) Act, 2021 effectively ended the ghost of retrospective tax disputes by withdrawing outstanding demands against entities such as Vodafone and Cairn Energy. The relaunch of the Vivad se Vishwas scheme has also helped reduce the broader direct-tax litigation backlog.Compliance, however, has required recalibration. Mandatory BIS certification under Quality Control Orders (QCOs) was designed to safeguard consumers, but the framework expanded extensively. The Gauba Committee found QCOs had grown from fewer than 70 to nearly 790, covering raw materials and intermediate goods. For imported components, compliance costs rose to ₹20 lakh, with six- to eight-month certification timelines disrupting domestic MSME supply chains. In response, the government withdrew QCOs on critical intermediate goods, including PVC, aluminium and zinc, providing relief to manufacturers.India’s modern trade pacts now introduce binding investment targets. The EFTA agreement sets a historic $100-billion target, but investor-protection mechanisms remain a work in progress. As the India-EFTA TEPA lacks an independent bilateral investment dispute mechanism, Switzerland is separately negotiating a bilateral investment treaty. This could inform negotiations with the EU and the U.K.Further, speeds remain uneven. The DPIIT is the nodal agency but not the decision-maker on approvals. A revised SOP issued in May 2026 sets a 12-week deadline, but compliance remains uneven. However, large-scale projects such as Tata Electronics’ semiconductor facility in Dholera, Gujarat, demonstrate how effective administrative coordination can accelerate capital deployment.Reform lessons from successesIndia’s reform agenda can draw lessons from past successes. Singapore’s CECA has facilitated over $195 billion in cumulative FDI since 2000, including $19.8 billion last year. Its non-discrimination and investor-protection frameworks are a useful blueprint for treaty negotiations. Domestically, the mobile-phone industry shows the potential of coordinated policy: production has grown 33-fold since FY15, from ₹180 billion to ₹6.27 trillion, while exports reached ₹2.59 trillion. India is now the world’s second-largest mobile-phone manufacturer by volume and meets 99.2% of domestic demand through local production.India’s rise to the 11th-largest FDI destination and the world’s second-largest mobile-phone manufacturer reflects its resolve in addressing internal governance bottlenecks. These achievements underscore the long-term benefits of sustained institutional reform and free trade.Bharat Joshi is Director, ACTL, a logistics company, and the CEO of J Curve Ventures, an advisory firm