India's Foreign Direct Investment (FDI) Trends
An analysis of the Reserve Bank of India's (RBI) monthly bulletin indicates that India's net FDI was negative for the fourth consecutive month in November 2025, with outflows surpassing inflows by $446 million.
Main Reasons for Negative Net FDI
- High repatriations and disinvestments by foreign companies in India.
- Direct investments are seen as growth-generating compared to portfolio investments, which target expected returns on equity and debt.
Foreign Portfolio Investments (FPI)
- Net FPI has been negative in the financial year 2025-26.
- Investor confidence is affected by uncertainty over the India-U.S. trade deal and the weakening of the rupee.
Gross Direct Inflows
- Stood at $6.4 billion in November 2025, a 22.5% increase from the previous year.
- Primary sources were Japan, Singapore, and the U.S., contributing over 75% of total FDI inflows.
- Major recipient sectors included financial services, manufacturing, and retail and wholesale trade.
Historical Context
- August 2025 saw a 159% fall in net FDI as outflows exceeded inflows.
- Net FDI remained negative in September and October 2025.
- November 2025's repatriation and disinvestment reached a five-month high of $5.3 billion.
Outward FDI
- Stood at $1.5 billion in November 2025, significantly lower than the $3.2 billion in October.
- Key destinations included Singapore, Mauritius, the U.S., and the UK.
- Over 70% of outward FDI went into manufacturing, financial, insurance, and business services.
Net Foreign Portfolio Investments
- Negative for the financial year 2025-26 up to January 16, 2026.
- October and November saw brief net inflows, but December registered net outflows of $4.2 billion.
- Debt flows turned negative in December after a period of five months.
