India’s dream of becoming a global manufacturing powerhouse faced a setback in FY2024–25, as only three foreign manufacturing firms registered operations in the country, according to data from the Ministry of Corporate Affairs (MCA). This is despite major initiatives like Make in India, Atmanirbhar Bharat, and PLI schemes aimed at attracting global manufacturers.
In stark contrast, 53 foreign companies in the services sector set up operations during the same period—still a drop from 91 new entrants in 2019–20.
Industrial Sector Losing Foreign Momentum
The three new manufacturing entrants were all in the machinery and equipment segment. Across the wider industrial sector—which includes construction, electricity, gas and water supply, mining, and manufacturing—they were the only new foreign companies to set up shop in FY25.
This makes FY25 the second lowest in foreign industrial firm setups since FY2019–20. In comparison, 10 foreign industrial companies entered India during the pandemic year FY21, the highest in the last six years.
The industrial sector’s share of total new foreign companies established in India dropped to just 10.2% in FY25, from 26% in FY20.
Why Is Foreign Manufacturing Slowing Down?
Several factors may be contributing to the slowdown:
- Global economic uncertainties and realignments in supply chains
- Concerns about regulatory environment or ease of doing business
- Competition from other emerging manufacturing destinations like Vietnam or Mexico
While India has reduced corporate taxes and pushed high-profile initiatives, actual inflow of foreign industrial investment appears to be lagging.
Number of Active Foreign Firms Also Falling
MCA data further shows a decline in active foreign companies operating in India:
- As of March 2025, India had 5,228 registered foreign companies
- Of these, only 3,286 (62.9%) were active
- This is down from 70.8% active firms in March 2019
This trend underscores the challenges of retaining foreign business interest, not just attracting new players.
The Road Ahead: Can India Reignite Manufacturing Interest?
While India continues to be a compelling market with a large consumer base and talent pool, the data suggests that more structural reforms may be needed to convert interest into action. Focused improvements in logistics, land acquisition, licensing, and dispute resolution may help boost confidence among foreign manufacturers.
For now, the sharp decline in foreign manufacturing setups signals a sobering reality check for India’s ambition to rival China as a global manufacturing hub.
