Net FDI into India Falls to $0.4 Billion in FY25 Amid Repatriation Surge

India’s net foreign direct investment (FDI) has taken a significant hit. It dropped to just $0.4 billion in FY25, a steep fall from $11.5 billion the year before. According to the Reserve Bank of India (RBI), this sharp dip mostly results from a surge in money being pulled out of the country and Indian companies stepping up their investments overseas.

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Inflows Still Going Strong

Here’s the twist: while net FDI decreased, gross FDI inflows increased. In FY25, India attracted $75.1 billion in gross FDI, a solid 15.2% jump from $65.2 billion in FY24. That’s a clear sign investors still see strong potential in India’s long-term growth story.

Why Net FDI Dropped

So, what’s behind the fall in net FDI? Two big reasons: repatriation and outward investment. Foreign investors took out a whopping $48.9 billion during the first 11 months of FY25, up from $40.7 billion the year before. At the same time, Indian companies ramped up their global reach, nearly doubling their outward investments to $24.8 billion from $13 billion.

Which Sectors and Countries Are Leading

Manufacturing was the big winner regarding FDI inflows, pulling in the most at 24.1%. Next in line were financial services and the electricity sector. On the global map, Singapore topped the charts as the largest source of equity inflows with a 29.8% share, followed by Mauritius and the U.S.

What the Economic Survey Says

India’s Economic Survey 2024–25 offered an interesting perspective. It sees the rise in outflows as a kind of growing pain, proof that India’s capital markets are maturing. Foreign investors are now cashing in through IPOs and secondary sales. Still, the report did flag a concern: these outflows could widen the current account deficit, which might require some policy fine-tuning.

India Slips in Global FDI Rankings

India’s global standing in FDI has also shifted. The latest World Investment Report by UNCTAD shows India dropped to 15th after holding a spot in the top 10 for four straight years. It’s a sign that the global investment landscape is changing, and India needs to adjust its strategies to stay competitive.

What Needs to Be Done

This fall in net FDI is a wake-up call. To keep foreign money flowing in, India will need to double down on making it easier to do business, keeping its policies stable, and solving industry-specific issues. The goal? Ensure investors not only come but also stay.

Final Takeaway

In short, while investors are still bringing money into India, even more is returning. This is a sign of a more mature, globally connected economy, but it also presents a challenge. India needs to evolve with the times and make smart policy moves to stay an attractive destination for foreign capital.