April net FDI inflows at 35-month high, spend on foreign studies down 21%

Indian Express

13 hours ago

India received net Foreign Direct Investment (FDI) of $3.95 billion in April, the most in 35 months and more than double from a year ago, data released by the Reserve Bank of India (RBI) on Wednesday showed, while spending on foreign studies under the central bank's Liberalised Remittance Scheme (LRS) was down year-on-year for the ninth month in a row.
The surge in foreign investments in the first month of the current fiscal came after March had seen net outflows of $438 million, with six of the last nine months of 2024-25 seeing outflows on a net basis.
On a gross basis, FDI inflows in April stood at $8.80 billion – the highest in 39 months – and up 23 per cent year-on-year. Net FDI is calculated after adjusting for investments that are repatriated by foreign companies and overseas investments made by Indian companies. Investments in manufacturing and business services made up nearly half the gross FDI inflow figure in April, RBI economists said in the central bank's monthly State of the Economy article, also published Wednesday.
The increase in April follows a particularly difficult year for India, with 2024-25 seeing net FDI inflows of just $2.29 billion, down 77 per cent from $10.13 billion in 2023-24. According to RBI economists, the increase in repatriation in 2024-25 'is a sign of a mature market where foreign investors can enter and exit smoothly'.
On a gross basis, FDI inflows into India in 2024-25 were up 14 per cent at $81.04 billion, which the RBI said was indicative of India remaining an attractive investment destination.
Earlier this month on June 16, the World Bank had warned that FDI into developing countries had fallen to $435 billion in 2023 – the lowest in nearly 20 years – due to rising trade and investment barriers. According to M. Ayhan Kose, the World Bank Group's Deputy Chief Economist, the sharp drop in FDI for developing countries 'should sound alarm bells'. Reversing the trend, Kose had said, was 'essential for job creation, sustained growth, and achieving broader development goals'.
Outbound flows continue
To be sure, foreign investors continued to repatriate money in April, although the number more than halved from a year ago to $1.67 billion, the RBI data showed. Even compared to March, the figure was down 36 per cent.
In 2024-25 as a whole, repatriation and disinvestment by foreigners had risen 16 per cent to $51.49 billion.
FDI by Indian companies, meanwhile, remained robust in April, standing at $3.19 billion, up 169 per cent from a year ago. 'Top sectors for outward FDI included electricity, gas and water, and financial, insurance and business services, while major destinations included Singapore, Mauritius, and Germany,' the RBI's State of the Economy article said.
Falling spending on foreign studies
Money sent abroad by Indian residents under the RBI's LRS, meanwhile, rose 9 per cent year-on-year in April to $2.48 billion on the back of a 11 per cent increase in spending on travel to $1.27 billion. Travel-related remittances by Indian residents ordinarily makes up more than half the total LRS remittances.
However, remittances for foreign studies – another sizable category of overseas spending – was down 21 per cent in April at $164 million. In fact, expenditure under the LRS for overseas studies is 21 per cent down for the first four months of 2025 at $874 million. The fall in April was the ninth month in a row that money sent abroad for studies under the LRS was down on a year-on-year basis.
Under the LRS, the RBI permits residents to send up to $250,000 every financial year abroad for certain current and capital account transactions, including travel, studies, medical treatment, and investments in foreign stocks, among others.
The continued fall in money sent abroad by Indians for studies comes amid uncertainty in the US, with the number of student visas issued to Indians in January-September 2024 down 38 per cent year-on-year, The Indian Express had reported in December 2024.
Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy.
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