India is intensifying efforts to attract foreign direct investment in priority sectors such as chemicals, electronics, leather, and footwear, amid declining FDI inflows. The government is also fast-tracking the Jan Vishwas 2.0 Bill to ease compliance and decriminalise business laws, signaling its commitment to creating an investor-friendly environment.
The Government of India, through the Department for Promotion of Industry and Internal Trade (DPIIT) and Invest India, is actively courting foreign direct investment (FDI) in key sectors including chemicals, electronics system design and manufacturing (ESDM), leather, and footwear. This initiative is part of a broader strategy to enhance India’s position in global supply chains and address a sharp drop in capital inflows.
According to an official familiar with the development, DPIIT is in ongoing dialogue with several state governments to attract overseas capital. These discussions are intended to localize FDI planning and leverage regional strengths. Notably, Andhra Pradesh and Karnataka are already collaborating with the Centre to craft targeted investment strategies, while states like Uttar Pradesh, Odisha, Madhya Pradesh, and Maharashtra are also reporting growing interest from foreign investors.
This push comes against a backdrop of slowing equity inflows. In the March 2025 quarter, India’s FDI equity inflow contracted by 24.5% to $9.34 billion. The situation worsened in May 2025, when net inflows fell to a mere $35 million—reflecting a 98% year-on-year decline and a 99% drop from April levels. The government, however, remains focused on expanding annual FDI inflows from the current $70–80 billion to a long-term target of $100 billion.
Global supply chain diversification is playing in India’s favor. A growing number of international players, including large toy manufacturers, are evaluating partial shifts to Indian operations to reduce their China exposure. Sectoral trends continue to support this transition, with services, computer software and hardware, telecommunications, trading, construction development, automobiles, and pharmaceuticals already among the top contributors to FDI inflows.
To support these ambitions, the government is preparing to introduce the Jan Vishwas 2.0 Bill in Parliament during the ongoing monsoon session. A cabinet note detailing the amendments is reportedly in its final stages. The upcoming bill aims to decriminalise and deregulate more than 100 provisions across several business-related laws—further improving ease of doing business.
This follows the precedent set by the Jan Vishwas Act 2023, which removed criminal penalties from 183 provisions under 42 laws and reduced over 40,000 compliance burdens across India. The new version is expected to deepen this reformist approach, helping India stand out in a competitive global investment landscape.