Surge in Foreign Direct Investment

FDI inflows to India soared by 73% to $47 billion in 2025, driven by major investments in services, manufacturing, and data centres. Policy reforms and global supply chain integration underpin this growth, reinforcing India’s appeal as a destination for international capital and technology.

Energy transition meets grid constraints

Renewables are growing rapidly, yet Brazil curtailed roughly 20% of wind/solar output in 2025 with estimated losses around BRL 6.5bn, reflecting grid bottlenecks. Investors must factor transmission availability, curtailment clauses and regulatory responses into projects and PPAs.

Human Rights, Sanctions, and Diplomacy

China’s use of sanctions in response to foreign criticism—especially on human rights—remains a diplomatic lever. Recent lifting of sanctions on UK politicians signals selective engagement, but ongoing concerns over governance and rights continue to affect reputational and operational risks.

Resilient Policy Reforms and Governance

Recent reforms include tax simplification, legal modernization, and improved ease of doing business. These measures support startups, MSMEs, and foreign investors, fostering a more transparent, predictable, and growth-oriented business environment that underpins India’s economic ascent.

Supply Chain Resilience Amid Global Disruptions

Global supply chains remain in a state of permanent disruption due to geopolitical tensions, trade realignments, and energy volatility. Finnish businesses are adapting by diversifying sourcing and investing in digital infrastructure, but exposure to external shocks remains a critical risk factor.

India-EU Free Trade Agreement Impact

The India-EU FTA, finalized after 18 years, will eliminate tariffs on over 90% of goods and liberalize services, unlocking up to $11 billion in new exports. It strengthens India’s integration into global value chains, but compliance costs and EU carbon taxes remain challenges.