India remains an attractive destination for foreign investment, and the recent rise in fund repatriation is a sign of a mature and well-functioning market, said Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday.
While gross foreign direct investment (FDI) inflows rose by 14% to USD 81 billion in FY2024–25 (from USD 71.3 billion in the previous year), net FDI sharply moderated to USD 0.4 billion, down from USD 10.1 billion a year earlier. The decline was attributed to higher repatriation of funds and a rise in net outward FDI, even as gross inflows remained robust.
“The increase in repatriation reflects a mature market where foreign investors have the confidence and ability to exit smoothly,” said Governor Malhotra during the June monetary policy briefing. “At the same time, the rise in gross FDI underscores India’s continued appeal as an investment destination.”
FPI flows and external sector trends
Foreign portfolio investment (FPI) also saw a steep decline, with inflows dropping to USD 1.7 billion in FY2024–25, as foreign investors took profits from Indian equities.
Despite rising global uncertainties and trade tensions, India’s merchandise trade remained resilient in April 2025. However, as imports outpaced exports, the trade deficit widened during the month.
Current Account Deficit expected to remain low
The governor noted that India’s current account deficit (CAD) for FY2024–25 is expected to stay low, supported by a narrower trade deficit in Q4, strong services exports, and robust remittance inflows.
“Looking ahead, net services and remittance receipts are likely to remain in surplus, offsetting any pressure from a wider goods trade deficit. We expect the CAD for FY2025–26 to remain within sustainable levels,” Malhotra added.
Forex Reserves and external sector resilience
India’s foreign exchange reserves stood at USD 691.5 billion as of May 30, 2025, slightly down from USD 692.72 billion the week before. The reserves are sufficient to cover more than 11 months of goods imports and about 96% of outstanding external debt, underscoring strong external stability.
“India’s external sector remains resilient,” said Malhotra. “Key vulnerability indicators have improved, reinforcing confidence in the economy’s ability to withstand external shocks.”
While gross foreign direct investment (FDI) inflows rose by 14% to USD 81 billion in FY2024–25 (from USD 71.3 billion in the previous year), net FDI sharply moderated to USD 0.4 billion, down from USD 10.1 billion a year earlier. The decline was attributed to higher repatriation of funds and a rise in net outward FDI, even as gross inflows remained robust.
“The increase in repatriation reflects a mature market where foreign investors have the confidence and ability to exit smoothly,” said Governor Malhotra during the June monetary policy briefing. “At the same time, the rise in gross FDI underscores India’s continued appeal as an investment destination.”
FPI flows and external sector trends
Foreign portfolio investment (FPI) also saw a steep decline, with inflows dropping to USD 1.7 billion in FY2024–25, as foreign investors took profits from Indian equities.Despite rising global uncertainties and trade tensions, India’s merchandise trade remained resilient in April 2025. However, as imports outpaced exports, the trade deficit widened during the month.
Current Account Deficit expected to remain low
The governor noted that India’s current account deficit (CAD) for FY2024–25 is expected to stay low, supported by a narrower trade deficit in Q4, strong services exports, and robust remittance inflows.“Looking ahead, net services and remittance receipts are likely to remain in surplus, offsetting any pressure from a wider goods trade deficit. We expect the CAD for FY2025–26 to remain within sustainable levels,” Malhotra added.
Forex Reserves and external sector resilience
India’s foreign exchange reserves stood at USD 691.5 billion as of May 30, 2025, slightly down from USD 692.72 billion the week before. The reserves are sufficient to cover more than 11 months of goods imports and about 96% of outstanding external debt, underscoring strong external stability.“India’s external sector remains resilient,” said Malhotra. “Key vulnerability indicators have improved, reinforcing confidence in the economy’s ability to withstand external shocks.”
