India’s net foreign direct investment (FDI) moderated sharply to $0.4 billion in fiscal year 2024-25 from $10.1 billion a year earlier, the Reserve Bank of India (RBI) said on Wednesday, citing higher outward FDI and repatriation of capital.Despite the drop in net flows, gross inward FDI recorded a 13.7% rise to $81 billion during the year, reflecting continued investor interest in India’s core sectors. Over 60% of the gross inflows were concentrated in manufacturing, financial services, electricity and other energy sectors, and communication services.
Singapore, Mauritius, the UAE, the Netherlands, and the United States accounted for more than 75% of total FDI inflows, the RBI said in its monthly bulletin.
“The moderation in net FDI is a sign of a mature market where foreign investors can enter and exit smoothly, which reflects positively on the Indian economy,” the RBI said.Outward FDI (OFDI) saw a sharp rise, increasing over 75% year-on-year to $29.2 billion in FY25. More than half of the increase in OFDI came from investments into Singapore, the US, UAE, Mauritius, and the Netherlands. Sectorally, financial, banking and insurance services led the OFDI surge, followed by manufacturing, wholesale and retail trade, and hospitality.Foreign portfolio investment (FPI) also showed weakness, with net outflows of $2.4 billion in April 2025. Equity FPI turned positive in the latter half of the month, aided by a 90-day pause in US tariff implementation and optimism over a potential US-India trade agreement. However, debt segment flows remained negative, the RBI said.Indian equities outperformed among emerging markets following an April market trough, while UK and European stocks have led global gains so far in 2025 amid the return of the Trump administration in the US.
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