India's gross FDI inflows reached $94.5 billion in 2025-26, a significant increase from $80.6 billion the previous year, according to the Reserve Bank of India (RBI). This rise comes amid a global economic landscape marked by elevated interest rates and geopolitical tensions.
Net FDI inflows saw a remarkable jump to $7.7 billion from $1 billion a year earlier, indicating strong investor confidence in India's economic prospects. The RBI highlighted that March marked the second consecutive month of positive net FDI inflows, despite a moderation in gross inflows. This was largely due to reduced repatriation and outward FDI.
Outward FDI also eased in March, with more than half of these investments directed towards Singapore, the UAE, and the Netherlands. Meanwhile, external commercial borrowings by Indian companies decreased to $43 billion in 2025-26 from $61.2 billion the previous year, as companies opted for domestic funding due to attractive conditions.
“On the capital account, gross FDI has been encouraging.”
Reserve Bank of India
The RBI noted continued pressure from foreign portfolio investor (FPI) outflows, with FPIs being net sellers in April and May amid geopolitical tensions in West Asia. This resulted in cumulative outflows of about $10 billion so far in 2026-27, primarily from equities.
"On the capital account, gross FDI has been encouraging," the RBI stated, adding that inflows are expected to remain robust amid a wave of greenfield investment announcements, particularly in the finance and technology sectors.
Background
The increase in FDI inflows underscores India's growing appeal as a stable investment destination, even as global economic conditions remain challenging. This trend is crucial for supporting the country's economic growth and development.
Looking ahead, the focus will be on how India continues to attract FDI amid global uncertainties. The resilience of FDI inflows will be pivotal in bolstering India's economic stability and growth trajectory.
