India’s share of global greenfield investments more than double China’s in 2020-25

Indian Economy and Investment Models · 10 October 2026 · Based on The Hindu (original report)

Must read — 2 past UPSC questions on this theme (Prelims GS-1 2020, Mains GS-2 2024); also both a Prelims fact and a Mains debate.

2-minute summary

According to the United Nations Conference on Trade and Development (UNCTAD) Trade and Development Report 2026, India's share of global greenfield foreign direct investment (FDI) reached 5.7% between 2020 and 2025, more than double China's share of 2.8%. This surge is driven by a global shift toward strategic sectors, which grew from 16% to 44% of global greenfield investments. Artificial intelligence (AI) infrastructure led these investments (12.4%), followed by semiconductors (8.1%) and energy transition (7.8%). While India, Malaysia (4%), and Indonesia (3.8%) emerged as key destinations in developing Asia, strategic investments remain heavily concentrated in Europe (28.4%) and North America (28%), posing integration challenges for the Global South. The report projects India as the fastest-growing major economy, with GDP growth at 7.3% in 2026 and 6.8% in 2027, propelled by public infrastructure and manufacturing. However, it cautions that rising prices and input costs are beginning to strain domestic household consumption, which is projected to decelerate.

Why it's in the news

UNCTAD has released its Trade and Development Report 2026, highlighting that India captured 5.7% of global greenfield investments during 2020-25, outperforming China (2.8%) and other developing economies in attracting strategic capital.

Facts to remember

According to UNCTAD's Trade and Development Report 2026, India's share of global greenfield investments during 2020-25 stood at 5.7%, compared to China's 2.8%.
Strategic sectors grew from 16% to 44% of global greenfield investments between 2020 and 2025.
Within strategic greenfield investments, Artificial Intelligence (AI) infrastructure attracted the largest share at 12.4%, followed by semiconductors at 8.1% and energy transition at 7.8%.
UNCTAD projects India's GDP to expand by 7.3% in 2026 and 6.8% in 2027.

Background and context

Historically, China has been the 'factory of the world,' attracting the bulk of global manufacturing FDI since its WTO accession in 2001. However, rising geopolitical tensions, the 'China+1' strategy adopted by multinational corporations, and supply chain disruptions have forced a realignment of global capital. Greenfield investments—where a parent company establishes a completely new operational facility or venture in a foreign country—are increasingly targeting strategic sectors like semiconductors, AI, and clean energy. India has capitalized on this shift through aggressive policy interventions, such as the Production Linked Incentive (PLI) schemes across 14 sectors and corporate tax cuts. While India has successfully positioned itself as an alternative investment hub in developing Asia alongside Malaysia and Indonesia, the UNCTAD report highlights a critical structural challenge: strategic capital remains highly concentrated in the Global North (Europe and North America), leaving the broader Global South facing integration hurdles.

Committees and reports

Trade and Development Report 2026 — Published by UNCTAD, it analyzes global macroeconomic trends, investment patterns, and industrial policies, highlighting India's rise in greenfield FDI.

Government schemes

Production Linked Incentive (PLI) Scheme — A key industrial policy tool that offers financial incentives to boost domestic manufacturing and attract large-scale greenfield investments in strategic sectors.

International organisations

United Nations Conference on Trade and Development (UNCTAD) — A permanent intergovernmental body established by the UN General Assembly in 1964, headquartered in Geneva, which publishes the Trade and Development Report and the World Investment Report.

Previous UPSC questions on this theme

Prelims GS-1 2020 — With reference to Foreign Direct Investment in India, which one of the following is considered its major characteristic ? (a) It is the investment through capital instruments essentially in a listed company. (b) It is a largely non-debt creating capital flow. (c) It is the investment which involves debt-servicing. (d) It is the investment made by foreign institutional investors in the Government securities.
Mains GS-2 2024 — 'The West is fostering India as an alternative to reduce dependence on China's supply chain and as a strategic ally to counter China's political and economic dominance.' Explain this statement with examples.

Mains practice: Analyze the factors enabling India to outpace China in attracting global greenfield investments in strategic sectors. What structural challenges must India address to sustain this investment momentum?

According to the UNCTAD Trade and Development Report 2026, India captured 5.7% of global greenfield investments during 2020-25, more than double China’s share of 2.8%. This reflects a structural shift in global capital flows toward strategic sectors like AI infrastructure, semiconductors, and energy transition.

**Factors Enabling India's Greenfield Investment Surge**

• **Geopolitical Realignment & China+1 Strategy:** Rising geopolitical tensions and supply chain vulnerabilities have prompted multinational corporations to diversify away from China, positioning India as a stable democratic alternative.

• **Aggressive Industrial Policy:** India implemented 707 industrial policy measures during 2022-25. Key initiatives like the Production Linked Incentive (PLI) scheme (Ministry of Commerce and Industry) across 14 sectors have successfully de-risked private capital.

• **Robust Macroeconomic Fundamentals:** UNCTAD projects India's GDP to grow at 7.3% in 2026, driven by public capital expenditure (Capex) which reached an all-time high of ₹11.11 lakh crore in Union Budget 2024-25.

• **Digital Public Infrastructure (DPI):** India's robust digital ecosystem (India Stack) has lowered transaction costs, attracting high-tech greenfield investments, particularly in AI infrastructure (which led global strategic FDI at 12.4%).

**Key Structural Challenges**

• **Geographic Concentration of Capital:** Despite India's gains, 56.4% of strategic greenfield investment remains concentrated in Europe and North America, limiting deep integration for the Global South.

• **Domestic Consumption Strain:** UNCTAD warns that India's household consumption growth is decelerating (projected at 5.6% next year) due to persistent inflation and high input costs, which could deter long-term market-seeking FDI.

• **Skill Mismatch:** High-tech sectors like semiconductors (8.1% of global FDI) require specialized engineering talent, whereas India's labor force still faces structural underemployment.

**Way Forward**

• **Deepen FTAs:** Negotiate comprehensive trade agreements with the EU and UK to integrate Indian manufacturing into Western supply chains.

• **Enhance Ease of Doing Business:** Streamline land acquisition and labor compliance at the state level to reduce regulatory drag.

• **Human Capital Investment:** Align higher education curricula with industry needs, focusing on VLSI design, AI, and advanced materials.

**Conclusion**

Sustaining greenfield investment is vital for India to achieve its 'Viksit Bharat @ 2047' vision, transitioning from an assembly-based economy to a high-value global manufacturing hub.

Prelims practice questions

Q1. Consider the following statements regarding global investment trends based on the UNCTAD Trade and Development Report 2026: 1. India's share of global greenfield investments during 2020-25 was more than double that of China. 2. The majority of global strategic greenfield investments during 2020-25 were concentrated in developing Asia. 3. Artificial intelligence infrastructure attracted a smaller share of global greenfield investment than the semiconductor value chain. How many of the above statements are correct?

Only one
Only two
All three
None

Answer: A. Statement 1 is correct: India's share was 5.7% while China's was 2.8%. Statement 2 is incorrect: Europe (28.4%) and North America (28%) together captured over 56% of strategic investments, meaning they remain concentrated in the Global North, not developing Asia. Statement 3 is incorrect: AI infrastructure attracted the largest share at 12.4%, while semiconductors attracted 8.1%.

Q2. Consider the following statements: Statement-I: Foreign Direct Investment (FDI) in the form of greenfield investments is generally considered a non-debt-creating capital flow that brings in new physical assets. Statement-II: Greenfield investments involve a foreign company purchasing existing shares or assets of an established domestic enterprise rather than building new facilities. Which one of the following is correct in respect of the above statements?

Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
Both Statement-I and Statement-II are correct but Statement-II is not the correct explanation for Statement-I
Statement-I is correct but Statement-II is incorrect
Statement-I is incorrect but Statement-II is correct

Answer: C. Statement-I is correct because FDI is a non-debt-creating capital flow that builds physical capacity. Statement-II is incorrect because greenfield investment refers to establishing completely new ventures/facilities in another country, whereas purchasing existing shares/assets of an established firm is a brownfield investment.

Q3. Which of the following organizations publishes the 'Trade and Development Report'?

International Monetary Fund (IMF)
United Nations Conference on Trade and Development (UNCTAD)
World Economic Forum (WEF)
World Trade Organization (WTO)

Answer: B. The Trade and Development Report is published annually by the United Nations Conference on Trade and Development (UNCTAD).

Revision flashcards

What is the definition of a "greenfield investment" in the context of Foreign Direct Investment (FDI)? An investment where a parent company starts a completely new venture or builds new operational facilities from scratch in a foreign country, unlike brownfield investments which involve acquiring existing assets.
What is the United Nations Conference on Trade and Development (UNCTAD), and where is it headquartered? Established in 1964 as a permanent intergovernmental body of the UN General Assembly, UNCTAD promotes the integration of developing countries into the world economy. It is headquartered in Geneva, Switzerland.
According to the UNCTAD Trade and Development Report released in October 2026, what were India's and China's respective shares of global greenfield investments during 2020-25? India accounted for 5.7% of global greenfield investments, while China's share was 2.8% during the same period.
Which strategic sector attracted the largest share of global greenfield investments during 2020-25 according to the October 2026 UNCTAD report? Artificial Intelligence (AI) infrastructure and related technologies, which attracted 12.4% of the total $845.7 billion global greenfield investment.
Why is the concentration of strategic greenfield investments in Europe and North America (over 56% combined) a concern for the Global South? It creates geographic disparities, limits technology transfer, and hinders the integration of developing and least developed countries into high-value global supply chains.