The rise in gross FDI, from $71.3 billion a year ago, shows growing confidence in India’s economic fundamentals. However, net FDI inflows moderated to $ 0.4 billion in 2024-25 from $ 10.1 billion a year ago, governor said that it is sign of a maturing economy where capital inflows and outflows coexist, offering investors both entry and exit flexibility.
“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,” said governor.
Other capital flows also increased. Net inflows through external commercial borrowings (ECBs) surged to $18.7 billion in FY2024-25, compared with just $3.6 billion the previous year. Non-resident deposits recorded higher net inflows of $16.2 billion, up from $14.7 billion.
Despite recent outflows in foreign portfolio investment (FPI), $2.1 billion in FY2025-26 until June 4, the country’s external buffers remain solid. Foreign exchange reserves stood at $691.5 billion as of May 30, sufficient to cover over 11 months of goods imports and nearly 96% of external debt.
Also the current account deficit remained contained at 0.7% of GDP in FY2023-24. External debt-to-GDP rose marginally to 19.1% as of December 2024, from 18.5% in March 2024.“Overall, India’s external sector remains resilient as key external sector vulnerability indicators continue to improve,” the governor said. “We remain confident of meeting our external financing requirements.”
