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Lower net FDI due to repatriation signals mature market, says RBI governor
Net FDI flows moderated to $0.4 billion in FY25, down from $10.1 billion the previous year, data released by the RBI earlier this month showed.
Gross FDI inflows remained strong, rising by around 14 per cent to $81.0 billion in 2024-25 from $71.3 billion a year earlier.
'It is germane to point out that this moderation [of net FDI] is on account of a rise in repatriation and net outward FDI while gross FDI actually increased by 14 per cent. Rise in repatriation is a sign of a mature market where foreign investors can enter and exit smoothly, while high gross FDI indicates that India continues to remain an attractive investment destination,' Malhotra said.
He also said external commercial borrowings (ECBs) and non-resident deposits witnessed higher net inflows compared to the previous year.
Net inflows under ECBs to India increased to $18.7 billion during 2024-25 compared with $3.6 billion a year earlier. In April 2025, net ECB to India rose to $2.8 billion from $0.5 billion a year earlier. Non-resident deposits recorded a higher net inflow of $16.2 billion in 2024-25 compared with $14.7 billion a year earlier.
'Overall, India's external sector remains resilient as key external sector vulnerability indicators continue to improve. We remain confident of meeting our external financing requirements,' he said.
Foreign portfolio investment (FPI) to India dropped sharply to $1.7 billion in 2024-25, as foreign portfolio investors booked profits in equities.
According to the RBI's State of Economy report, more than 60 per cent of gross FDI inflows in FY25 were in manufacturing, financial services, electricity and other energy, and communication services sectors. Singapore, Mauritius, the UAE, the Netherlands and the United States accounted for more than 75 per cent of the flows.
Repatriation and disinvestment by those who made direct investments in India increased to $51.5 billion in FY25 from $44.5 billion in FY24 and $29.3 billion in FY23.
Overseas investments made by Indian companies (outward FDI) increased to $29.2 billion in FY25 from $16.7 billion in FY24 and $14 billion in FY23. Singapore, the US, the United Arab Emirates, Mauritius and the Netherlands together accounted for more than half of the rise in outward FDI, the report said.
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