After the successful BRICS Summit in New Delhi (Sept 2026), Prime Minister Narendra Modi is set to sign major FTAs with Canada and the European Union in Dec 2026. The trade drive, together with domestic reforms, has pushed India’s inbound FDI to a record $94.8 billion in FY 2026, placing the country 11th globally.
Key Developments
- PM Modi’s Dec 2026 visits aim to seal FTAs with Canada and the EU, cementing India’s role in global supply chains.
- Gross inward FDI rose 44% YoY, reaching $94.8 bn (FY 2026).
- The DPIIT issued a revised SOP (May 2026) setting a 12‑week deadline for project approvals.
- Implementation of the four Labour Codes is underway; Gujarat has already notified all rules.
- Commercial dispute resolution improved via the Commercial Courts Act and the 2023 Mediation Act, though case backlogs remain high.
Important Facts
Greenfield data‑centre projects attracted about $7 bn in the first three quarters of 2025, placing India in the global top‑10 but far behind South Korea ($21 bn), the United States ($29 bn) and France ($69 bn). The lag is attributed to internal bottlenecks between centre and state authorities, and between the DPIIT and line ministries. On the regulatory front, the expansion of Quality Control Orders (QCOs) from 70 to 790 items raised compliance costs for MSMEs to ₹20 lakh and delayed certification by 6‑8 months, prompting the government to withdraw QCOs on critical intermediates such as PVC, aluminium and zinc.
Exam Relevance
- Understanding the strategic importance of post‑BRICS FTAs helps answer questions on India’s foreign economic policy (GS3).
- Data on record FDI informs discussions on investment climate and reforms (GS3).
- The rollout of Labour Codes illustrates centre‑state coordination challenges, a common GS2 topic.
- Reforms like the Commercial Courts Act and Mediation Act are relevant to questions on judicial reforms and ease of doing business (GS3).
Way Forward
To translate commitments into actual projects, India must streamline internal clearances by aligning central rules with state notifications, especially for sectors such as data centres and green manufacturing. Strengthening the staffing of commercial benches and expanding mediation centres will cut the average dispute resolution time, benefitting both foreign investors and domestic MSMEs. Finally, incorporating binding investment protection clauses in upcoming FTAs—drawing lessons from Singapore’s CECA—will enhance investor confidence and sustain the upward FDI trajectory.