India's FDI Soars 73% to $47B as Tech Giants Bet Big on AI & Data Centers

The increase was "mainly due to large investments in services -- including finance, IT (information technology), and R&D (Research and Development) -- as well as manufacturing, supported by policies aimed at integrating India into global supply chains", the UN trade agency said in a report released on Tuesday.

India's FDI growth rate was among the highest.

Investments in data centres in India totalled $7 billion during the first three quarters of last year, according to the latest issue of the Global Investment Trends Monitor. That put India in seventh place among the countries receiving investments for data centres during that period.

However, in the fourth quarter, FDI in the sector jumped significantly, making the sector ever more dynamic.

Google announced in October that it was investing $15 billion in an AI hub in Andhra Pradesh.

In December, Microsoft announced $17.5 billion investments in AI and cloud infrastructure, and data centres.

And also in December, Amazon said it would invest $35 billion in AI and other sectors.

These investments are likely to be spread over a few years.

Globally, the report said FDI increased last year by 14 per cent to $1.6 trillion.

"Industry trends in 2025 show that data centres now shape the FDI landscape; they accounted for one-fifth of global greenfield project values," the report said.

With demand driven by AI infrastructure and proprietary digital networks, announced investments in the area exceeded $270 billion, according to the report.

Semiconductors was another area showing high growth, with the value of newly announced projects increasing by 35 per cent, it said.

In areas that were exposed to tariff risks, project numbers fell sharply by 25 per cent, according to UNCTAD.

Textiles, electronics, and machinery were among the sectors hardest hit, the report said.

Globally, most of the FDI flows went to developed economies, where collectively the increase was 43 per cent, amounting to $728 billion, according to UNCTAD.

With India being an outlier, developing economies saw a decline in FDI by 2 per cent to an estimated $877 billion, the report said.

UNCTAD said that for the third consecutive year, FDI in China declined.

It fell by 8 per cent to an estimated $107.5 billion, with the majority of investment concentrated in strategic and high-growth sectors, it added.

Overall, investor sentiment remained weak, UNCTAD said.

"The message is clear: headline growth overstates the recovery. Policymakers should focus on reviving real investment, not just financial flows," it said.

Indicative of weak investor sentiment, the report said the value of international mergers and acquisitions fell by 10 per cent.

International project finance declined for the fourth consecutive year by 16 in value and by 12 per cent in the number of deals, falling to levels last seen in 2019, the report said.

The number of greenfield project announcements dropped by 16 per cent, even though a small number of mega-projects drove the high total project values, according to the report.

- IANS