Significant Drop in Foreign Direct Investment in India for FY 2024-25

Dramatic Decline in FDI

According to a recent report from the Reserve Bank of India, foreign direct investment (FDI) in India has seen a staggering decline of 96%, dropping to $353 million for the financial year 2024-25.

In comparison, the net FDI inflow was significantly higher at $10.1 billion in 2023-24 and $28.0 billion in 2022-23.

Net FDI represents the difference between the total foreign investment entering the country and the amount repatriated by foreign companies operating in India.

The Reserve Bank's monthly bulletin indicated that this sharp decrease in net FDI is attributed to an increase in outward foreign direct investment by Indian firms and substantial capital repatriation by foreign investors.

The central bank remarked, “This trend indicates a mature market where foreign investors can navigate entry and exit seamlessly, which is a positive indicator for the Indian economy.”

Additionally, the report highlighted that capital repatriation and disinvestment by foreign businesses in India surged to $51.5 billion in 2024-25, marking the highest level in nearly ten years, up from $44.5 billion the previous year.

Conversely, gross FDI increased to $81 billion in 2024-25, compared to $71.3 billion in the prior year. Gross FDI refers to the investments made directly by foreign entities into productive assets within India, which was $71.4 billion in 2022-23.

The central bank noted that gross FDI inflows are primarily concentrated in sectors such as manufacturing, financial services, electricity, energy, and communication services, accounting for over 60% of total inflows.

In terms of sources, Singapore, Mauritius, the United Arab Emirates, the Netherlands, and the United States contributed to more than 75% of the FDI flows in 2024-25.

Furthermore, outward FDI from India rose to $29.2 billion in 2024-25, up from $16.7 billion the previous year and $14 billion in 2022-23.