India attracted $351 billion in greenfield foreign direct investment (FDI) between 2021 and 2025, more than twice the $159 billion recorded by China during the same period, according to data from Boston Consulting Group (BCG). India’s total increased 61% from $222 billion in the previous five-year period, while China’s greenfield investment declined 54% from $350 billion. The figures point to a significant change in the distribution of announced foreign investment projects as multinational companies reconsider where they establish new production facilities and expand their international operations.
The shift comes amid geopolitical uncertainty, trade tensions and growing interest in diversifying manufacturing and sourcing beyond a single country. India has become one of the destinations companies are considering as part of the broader China Plus One strategy. However, attracting investment commitments is only one part of the challenge. BCG has highlighted the importance of infrastructure, workforce skills, cost competitiveness and domestic demand in helping India turn investment interest into operational factories, jobs and a larger manufacturing footprint.
Key Takeaways
- India’s greenfield FDI: The country attracted $351 billion between 2021 and 2025, according to BCG data.
- China’s investment total: China recorded $159 billion during the same period.
- India’s growth: Greenfield investment increased 61% from $222 billion in 2016–2020.
- China’s decline: Its greenfield investment fell 54% from $350 billion in the preceding five-year period.
- Supply-chain diversification: Companies are increasingly considering multiple manufacturing and sourcing locations to reduce dependence on a single market.
- Regional competition: Malaysia, Indonesia and Thailand also recorded increases in greenfield investment during the period.
- India’s challenge: Infrastructure, skilled labour, production costs and domestic demand will influence whether investment commitments translate into sustained industrial growth.
India Pulls Ahead in Greenfield Foreign Investment
The BCG figures indicate that India attracted substantially more greenfield investment than China during 2021–2025. Greenfield FDI generally refers to foreign companies establishing new business operations or building new facilities in another country, rather than acquiring an existing business.
This type of investment can be particularly important for manufacturing economies because it may involve constructing factories, installing production equipment, developing industrial facilities and establishing new operations. Depending on the project, it can also generate demand for suppliers, logistics providers, maintenance services and skilled workers.
India’s $351 billion total compares with $222 billion during 2016–2020, representing an increase of approximately 58% when calculated from the rounded figures. BCG reports the increase as 61%, reflecting the figures used in its underlying data.
China, meanwhile, attracted $159 billion in greenfield investment during 2021–2025, down from $350 billion in the previous five-year period. The country had recorded a much higher total of $514 billion during 2006–2010, illustrating how its position as a destination for new foreign projects has changed over time.
| Greenfield FDI measure | India | China |
|---|---|---|
| 2006–2010 | Not specified in the cited comparison | $514 billion |
| 2016–2020 | $222 billion | $350 billion |
| 2021–2025 | $351 billion | $159 billion |
| Change from 2016–2020 | Approximately +61%, according to BCG | -54% |
| Overall direction | Increased | Declined |
Source: Boston Consulting Group data reported by The Economic Times. Figures are rounded.
The comparison shows that India has become a major destination for new foreign investment projects. It does not, by itself, establish that India has overtaken China across every measure of foreign investment, manufacturing output or industrial competitiveness.
Greenfield project investment is different from total FDI inflows, mergers and acquisitions, reinvested earnings and other cross-border capital movements. The figures should therefore be interpreted within the specific category measured.
What Is Greenfield FDI and Why Does It Matter?
Foreign direct investment occurs when a company or investor establishes a lasting business interest in another country. Greenfield investment is one form of FDI, typically involving the creation of a new operation rather than purchasing an existing company.
For example, a multinational electronics manufacturer may build a new factory in India, install production lines, recruit workers and establish relationships with local suppliers. Such a project can create new industrial capacity instead of merely transferring ownership of an existing facility.
Greenfield projects can have several economic effects.
Creation of new production capacity
A new factory can expand the amount of goods produced domestically. Depending on the sector and the level of localization, this may help a country increase industrial output, develop exports and reduce dependence on imported products.
Employment and workforce development
New facilities require workers, technicians, engineers, supervisors and managers. Some projects also create indirect demand for transportation, security, equipment maintenance, catering and other supporting services.
The employment impact varies by industry. Capital-intensive semiconductor facilities, for example, may require substantial investment but employ fewer workers directly than some labour-intensive manufacturing operations.
Technology and supplier development
Foreign companies may introduce production processes, quality-control systems and technical expertise. Local suppliers can benefit when they become qualified to provide components, materials or services to multinational manufacturers.
These benefits are not automatic. They depend on how much work is performed locally, whether domestic suppliers can meet technical requirements and whether workers receive opportunities to develop relevant skills.
Long-term investment commitments
Building a factory can require significant expenditure on land, infrastructure, equipment and training. Once a project becomes operational, the investor has an interest in maintaining production and developing the surrounding business network.
However, announced project values are not the same as money already spent. Projects can be delayed, resized or cancelled, and some investment commitments are implemented over several years.
Why Multinational Companies Are Looking Beyond China
China remains a major manufacturing economy with extensive supplier networks, established infrastructure and a large industrial workforce. Nevertheless, international companies have increasingly examined whether concentrating production in a single country creates too much risk.
Several factors are influencing these decisions, including geopolitical tensions, tariffs, regulatory uncertainty and disruptions to international trade.
BCG’s analysis of foreign investment trends identifies geopolitics, trade policies and government incentives as increasingly important considerations in investment decisions. Companies are assessing not only production costs but also the strategic risks associated with their supply chains.
The China Plus One strategy
China Plus One refers to a business strategy in which companies retain significant operations in China while establishing additional production or sourcing capacity in another country.
The approach does not necessarily mean that companies are abandoning China. Instead, it allows them to diversify production, reduce dependence on a single location and gain flexibility if trade restrictions or other disruptions affect one market.
India can benefit from this strategy because of its large domestic market, expanding industrial base and access to a substantial workforce. For manufacturers seeking to serve Indian consumers while building export capacity, establishing local operations can also reduce some logistical and market-entry challenges.
However, investment decisions depend on the requirements of individual industries. A company producing advanced electronics may prioritize reliable electricity, specialized suppliers and component availability, while a labour-intensive manufacturer may place greater emphasis on workforce availability, logistics and operating costs.
Trade tensions and geopolitical uncertainty
US-China trade tensions and changing trade policies have encouraged businesses to reconsider where they manufacture goods for international markets.
Tariffs can change the relative cost of producing in different countries, while export controls and restrictions on technology transfers can complicate supply-chain planning.
As a result, companies are increasingly evaluating multiple production locations. India is one potential beneficiary, but it competes with other Asian economies that are also working to attract manufacturing investment.
India Is Competing With Southeast Asian Economies Too
The redistribution of greenfield investment is not limited to India and China. Several Southeast Asian countries recorded substantial increases in investment during 2021–2025, according to the BCG data reported by The Economic Times.
| Country | Greenfield FDI, 2021–2025 | Change from previous five-year period |
|---|---|---|
| India | $351 billion | +61% |
| China | $159 billion | -54% |
| Malaysia | $140 billion | +125% |
| Indonesia | $133 billion | +34% |
| Thailand | $56 billion | +97% |
| Vietnam | Not specified in the cited comparison | -12% |
| Philippines | Not specified in the cited comparison | -24% |
Source: BCG data as reported by The Economic Times. The reported growth rates refer to changes from the preceding five-year period.
Malaysia recorded a 125% increase in greenfield FDI, while Indonesia’s total rose 34%. Thailand also experienced strong growth, with investment increasing 97%.
The figures illustrate that companies are spreading new investment across multiple destinations rather than shifting all production from China to India. Southeast Asian countries have attracted projects linked to electronics, industrial components and other manufacturing activities.
Vietnam and the Philippines recorded declines in the period covered by the report, showing that investment patterns can vary considerably even among countries pursuing similar strategies.
For India, the implication is that investment opportunities are substantial but competitive. The country must continue improving infrastructure, workforce readiness and the operating environment if it wants to sustain its share of new manufacturing projects.
What Is Attracting Foreign Investors to India?
India offers several advantages that can influence multinational investment decisions. These include its large domestic consumer market, established services sector, expanding industrial capabilities and potential to serve as a manufacturing base for both domestic and international customers.
A large domestic market
Manufacturers often consider local demand when deciding where to build facilities. A large market can help companies achieve production scale while reducing their dependence on exports alone.
India’s population and expanding consumer economy create potential demand across industries such as electronics, automobiles, pharmaceuticals, consumer goods and industrial equipment.
A strong domestic market can also encourage suppliers to establish operations nearby, particularly when production requires frequent coordination between component manufacturers and final assemblers.
Government support for manufacturing
India has introduced policies and incentive programmes intended to encourage investment in selected sectors, including electronics, semiconductors and other manufacturing industries.
Such programmes can improve the economics of some projects by reducing initial costs or supporting the development of industrial capacity. Their effectiveness depends on policy design, implementation, infrastructure availability and the ability of companies to operate competitively after incentives end.
Workforce and industrial capabilities
India has a large workforce, but the availability of workers alone is not enough to guarantee manufacturing success. Companies need employees with the specific technical skills required for production, quality assurance, equipment maintenance and process control.
BCG managing director and senior partner Nikolaus Lang has emphasized the importance of workforce skills, infrastructure and cost competitiveness. Manufacturing operations may require capabilities ranging from stamping and painting to assembly and mechatronics.
The challenge is to ensure that training programmes and educational institutions prepare workers for the requirements of expanding industrial sectors.
Infrastructure and Skills Remain Major Challenges
India’s greenfield investment total demonstrates strong interest from foreign companies, but maintaining that momentum will require continued improvements in the conditions under which businesses operate.
Infrastructure is one of the central considerations. Manufacturers depend on reliable electricity, roads, ports, railways, industrial land and digital connectivity. Delays or bottlenecks can increase costs and make production schedules less predictable.
Logistics is particularly important for companies operating complex supply chains. Components may cross several borders before reaching a factory, while finished goods must be transported to domestic customers or export markets. Efficient logistics can reduce inventory requirements and help manufacturers respond more quickly to changes in demand.
Workforce skills are another constraint. New manufacturing facilities often need technicians and engineers who can operate specialized machinery, maintain equipment and meet strict quality standards. If the required workers are unavailable locally, companies may face higher recruitment and training costs.
Cost competitiveness also matters. Companies compare total operating expenses, including wages, energy, transportation, compliance and supplier costs. Low labour costs alone may not compensate for unreliable logistics or limited access to specialized components.
Finally, India needs sufficient domestic demand to support production at scale. A large population provides potential, but companies must still assess consumers’ purchasing power and the competitiveness of their products.
Will Greenfield FDI Translate Into More Jobs and Exports?
The economic impact of new foreign investment depends on whether projects move from announcement to construction and commercial operation.
A project that reaches completion can generate direct employment and demand for local suppliers. Once production begins, it may also contribute to exports, technology development and the growth of related industries.
However, not every announced investment reaches its planned scale. Companies may revise timelines when financing costs rise, demand weakens or construction becomes more expensive. Some projects may also import a substantial share of their components, limiting the immediate benefits for domestic suppliers.
The quality of investment matters as much as the headline value. Projects that develop local supplier networks, train workers and support higher-value manufacturing can have broader economic effects than operations with limited local linkages.
Policymakers and businesses therefore need to monitor indicators beyond announced investment totals. These include completed projects, actual capital expenditure, factory utilization, export performance, employment and the share of locally sourced inputs.
For India, converting greenfield investment into sustained industrial capacity will be important for maintaining investor confidence and building a stronger position in global manufacturing.
The Bigger Picture
India’s $351 billion greenfield FDI total for 2021–2025 reflects a notable shift in the location of new foreign investment projects. The decline in China’s total and the increases recorded by India and several Southeast Asian economies suggest that multinational companies are reassessing how they distribute manufacturing capacity and manage geopolitical risk. India’s large market and expanding industrial base give it an opportunity to attract more projects, but competition for investment remains strong.
The next stage will depend on execution. Infrastructure, skilled labour, predictable policies, cost competitiveness and supplier development will influence whether announced projects become productive factories and sustainable businesses. Greenfield investment can support jobs, exports and technology transfer, but those benefits depend on the type of project and its links to the domestic economy. The investment figures are an encouraging indicator of investor interest, not a guarantee that every commitment will translate into realized capital expenditure or long-term industrial growth.
Looking Ahead
India’s ability to maintain its position as a destination for new foreign projects will depend on whether it can address infrastructure bottlenecks, expand technical training and improve the competitiveness of domestic manufacturing. Companies will continue comparing India with China and other Asian economies when deciding where to establish new facilities. Future investment announcements will therefore need to be assessed alongside actual project completion, factory output, employment and export performance.
The broader trend points toward more diversified global supply chains rather than a complete departure from China. India has an opportunity to secure a larger role in manufacturing, but it will need to turn investor interest into efficient production and stronger supplier networks. The $351 billion figure provides a useful measure of greenfield investment during 2021–2025; the longer-term test is how much of that investment becomes operational capacity and contributes to sustained economic growth.
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