New Delhi, 16 Feb 2026:

India’s ambition to become a $5 trillion economy is not simply about expanding GDP. It is about reshaping the structure of growth. The next phase of economic expansion will depend less on incremental gains in traditional sectors and more on whether India can anchor technology-driven financial infrastructure within its own jurisdiction.

Foreign Direct Investment plays a decisive role in that shift. FDI brings more than capital; it brings technical expertise, institutional discipline, global networks, and long-term funding that allows emerging sectors to mature. If India intends to compete in technology-heavy finance and digital systems, it must create conditions that encourage global firms to establish substantive operations here rather than merely draw on Indian talent from abroad.

The contradiction is evident. India has around 93 million crypto users and some of the strongest blockchain developer talent in the world. Yet global digital asset firms frequently incorporate in jurisdictions such as Delaware, Singapore, or the Cayman Islands. Even when engineering teams are based in India, funding rounds are structured offshore and ownership remains outside Indian regulatory reach. The core reason is regulatory ambiguity. Virtual Digital Assets continue to lack a clear, comprehensive regulatory identity within India’s financial architecture.

This ambiguity carries economic consequences. India attracted $81.04 billion in FDI during FY 2024–25, with roughly 16 percent flowing into computer software and hardware. While that category includes substantial blockchain-related work, it does not reflect India becoming a preferred jurisdiction for global digital asset infrastructure. Much of the capital arrives through venture investments into Indian startups, rather than through multinational firms establishing licensed subsidiaries and compliance-heavy operations on Indian soil.

Globally, investment patterns have shifted. In 2024–25, crypto-related capital moved away from speculative activity toward regulated infrastructure. Institutional investors are prioritizing custody systems, settlement layers, and compliant platforms in jurisdictions that provide clarity rather than uncertainty. Singapore illustrates how policy can influence outcomes. Even as overall fintech funding cooled, crypto and blockchain investment there rose by 22 percent in the second half of 2024 to $267 million. The UAE experienced an even sharper acceleration, attracting $45.6 billion in FDI last year, nearly half again as much as the year before. Dubai alone announced 1,369 greenfield projects, with Web3, AI, and fintech at the forefront. These outcomes reflect deliberate regulatory positioning.

The United States followed a different path but reached a similar result. After spot Bitcoin ETFs were approved in early 2024, institutional confidence increased markedly. While ETF inflows do not qualify as foreign direct investment, they lowered perceived systemic risk and made it easier for firms to expand compliance-intensive services. Crypto ownership in the US now stands at 22 percent of the population, signalling mainstream adoption backed by regulatory recognition.

India’s situation is therefore unusual. Adoption is substantial, and technical capability is deep. Yet regulatory clarity remains limited. Without defined rules on licensing, custody, market oversight, and the treatment of tokenized assets and stablecoins, investors are unlikely to treat India as a stable base for regional digital asset operations. High demand alone does not unlock long-term capital. Regulatory certainty does.

The way forward is conceptually straightforward. India needs a structured and coherent VDA framework that establishes clear licensing pathways, sets custody and compliance standards aligned with global norms, and provides clarity on how digital assets fit within the broader financial system. Such clarity would shift India’s position from being primarily a source of talent to becoming a jurisdiction where companies incorporate, raise capital, and build infrastructure.

If the $5 trillion target is to carry real meaning, India cannot remain a high-adoption market paired with low investment certainty. Digital asset–linked FDI is increasingly flowing toward regulated infrastructure. That is where institutional capital moves. A coherent VDA framework is not a symbolic gesture toward innovation; it is an economic strategy tied directly to India’s growth trajectory.