India's gross FDI inflows in FY26 hit a record $94.5B
What's the story
India's gross foreign direct investment (FDI) inflows for the fiscal year 2025-26 have hit a record high of $94.53 billion, according to data from the Reserve Bank of India (RBI). The figure is a whopping 17% increase from the previous fiscal and surpasses the previous record of $84.84 billion set in 2021-22. However, despite this surge, net FDI inflows remained relatively low at $7.65 billion for FY26, up from last year's mere $959 million.
Net inflow
Understanding the net FDI inflows
Net FDI is the gross FDI adjusted for repatriated investments by foreign firms and overseas investments made by Indian firms. The low net inflow in the last two years despite record gross FDI inflows can be attributed to foreign investors withdrawing their investments from India. This withdrawal could be in the form of profits, dividends, or asset sales. At the same time, Indian companies are investing more abroad.
Investment trends
Repatriations and overseas investments
In FY26, repatriations by foreign investors reached a record high of $53.58 billion, up from $51.49 billion in FY25 and $44.47 billion in FY24. Meanwhile, overseas FDI by Indian companies also rose to $33.29 billion last fiscal year, compared to $28.17 billion and $16.68 billion in the previous two years respectively. These trends highlight the changing dynamics of global investment flows into and out of India.
Currency pressure
Rupee under pressure
The weak net FDI inflows have been putting pressure on the rupee's exchange rate. It nearly breached ₹97 per dollar earlier this week but ended at ₹95.69 per dollar on Friday after RBI's interventions in the forex market. Data released by RBI showed that its gross forex sales in March were nearly $30 billion, the highest since February 2025 when it sold $46.65 billion worth of foreign currency.