FDI Inflows Jump to $8.8 Billion in April, NRI Deposits Slow
India witnessed a robust surge in foreign direct investment (FDI) in April 2025, with inflows climbing to $8.8 billion—a 22% increase over the $7.2 billion recorded in the same month last year. The jump signals renewed investor confidence in India’s growth trajectory and has provided a crucial boost to the country’s foreign exchange reserves.
The positive momentum in FDI has also contributed to a broader improvement in India’s external sector resilience. The Reserve Bank of India (RBI) reported that forex reserves climbed to $698.95 billion as of mid-June, up from $665.4 billion at the end of March. This uptick offers a buffer against global volatility and currency pressures, with the central bank reiterating the strength of India’s macroeconomic fundamentals.
FDI Fuels Capital Inflows
Much of the April inflow was driven by sectors such as manufacturing and business services, which together accounted for nearly half of the total FDI. This sectoral spread reflects growing diversification and maturation of foreign investments in India, shifting from short-term bets to long-term commitments.
For the fiscal year 2024–25, gross FDI inflows rose 14% to reach $81 billion. However, net inflows were moderated by higher repatriation of funds by foreign investors, pointing to a mix of profit-booking and strategic exits.
NRI Deposits Show Weakening Trend
In contrast to the FDI uptick, Non-Resident Indian (NRI) deposit mobilisation slowed in April. Banks received $751 million through NRI deposit channels, down from $1.078 billion in the corresponding period last year. This decline may be attributed to global interest rate shifts, changing return expectations, or increased diversification of investment options among overseas Indians.
External Commercial Borrowings Rise
Complementing the trend in FDI, Indian companies also increased their reliance on external commercial borrowings (ECBs), raising $2.8 billion in April compared to just $0.5 billion in April 2024. This sharp rise indicates improved access to global credit markets and corporate confidence in future growth.
Positive Foreign Portfolio Investment Flow
Foreign portfolio investments (FPI) remained in positive territory for the third consecutive month in May, with equity inflows contributing $1.7 billion. These figures highlight sustained global interest in Indian markets despite broader geopolitical uncertainties.
The April data affirms India’s ability to attract stable long-term capital even amid global economic headwinds. With strong forex reserves, a widening investor base, and diversified capital inflows, India’s external sector continues to present a resilient front as it navigates the complexities of 2025.
