India witnessed a significant drop in net Foreign Direct Investment (FDI) during the Financial Year 2025, according to recent data from the Reserve Bank of India (RBI). Net FDI decreased to $0.4 billion, a 96% plunge from the $10.1 billion recorded in the previous year. This decline is largely due to increased repatriation and outward flow, indicating evolving investment patterns.
Despite the sharp decrease in net FDI, gross FDI inflows remained robust in FY25, demonstrating continued investor confidence. Gross FDI showed a 13.7% year-over-year increase, reaching $81 billion. The RBI suggests that the net FDI decline reflects a maturing market, where foreign investors can enter and exit the Indian market more seamlessly.
The Indian government is proactively implementing measures to attract further foreign investment. These initiatives include simplifying regulations, establishing committees to streamline business operations, and increasing the sectoral cap for insurance sector to 100%. These efforts aim to enhance India's attractiveness as a global investment destination and counteract the recent dip in net FDI.