As per RBI, gross FDI amounted to $88.3 billion, while net FDI inflows were $6.3 billion (April 2025- February 2026).
About Foreign Direct Investment (FDI)
- Meaning: Investment through equity instruments by a person resident outside India in an unlisted Indian company; or in 10% or more of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company.
- Regulation: Consolidated FDI Policy (2020); Foreign Exchange Management (Non-Debt Instruments) Rules, 2019.
- Gross and Net FDI
- Gross FDI: Total investment made by foreign entities directly into productive assets of India.
- Net FDI: Difference between inward FDI flows and outward FDI flows (Repatriation by foreign firms + Outward FDI by Indian firms).
Key Reasons for Lower Net FDI
- Rising Repatriation: Including disinvestment by foreign investors limiting net inflows; repatriation is a sign of mature market where investors can enter/exit smoothly.
- Higher Overseas Direct Investment (ODI): Overseas expansion of domestic firms and their integration into global value chains; stronger corporate balance sheets, liberalised ODI framework (2022).
- Geopolitical Headwinds: Geopolitical strife and tightening financial conditions have cooled greenfield project announcements globally.
Key Measures to Increase FDI in India
- Sectoral Reforms: Increased FDI caps in Sectors like Defence, Insurance, Pension, Coal Mining, Civil Aviation, etc.
- Almost 90% of FDI is through automatic route.
- Improving Business Environment: Business Reforms Action Plan (BRAP) 2024 rankings; Logistics Ease Across Different States (LEADS) 2024; Jan Vishwas (Amendment of Provisions) Act, 2023, etc.
- Global Partnerships: India-EU Free Trade Agreement (FTA); India-Oman Comprehensive Economic Partnership Agreement (CEPA); etc.
