India’s Net FDI Plummets to $0.4 Billion in FY25 Amid Rising Repatriation
India’s net foreign direct investment (FDI) plunged dramatically in the financial year 2024-25 (FY25), falling over 96% to just $0.4 billion, compared to $10.1 billion in FY24. This sharp decline comes in stark contrast to the country’s gross FDI inflows, which rose by 13.7% to reach a record $81 billion — up from $71.3 billion in FY24 and $71.4 billion in FY23.
The trend marks a growing divergence between the capital entering India and the capital being pulled out, raising fresh concerns over investor confidence, policy stability, and long-term commitment of global capital to India’s economic growth story.
Repatriation and Outward Investments Trigger FDI Slump
The core reason behind the steep fall in net FDI lies in the surge of repatriation by foreign investors and the growing trend of Indian companies investing abroad. Repatriation or disinvestment increased to $51.5 billion in FY25, up significantly from $44.5 billion in FY24 and $29.3 billion in FY23.
At the same time, Indian outbound FDI nearly doubled to $29.2 billion in FY25 from $16.7 billion a year earlier. This twin trend of rising exits and growing overseas investments by Indian corporates nullified the impact of the record-setting gross inflows.
Sector-Wise and Country-Wise Breakdown of FDI
While net FDI shrank, the gross inflows remained concentrated in a few key sectors. Manufacturing, financial services, electricity and energy, and communication services collectively received more than 60% of total FDI inflows in FY25.
On the geographic front, more than three-fourths of the FDI originated from five countries: Singapore, Mauritius, UAE, the Netherlands, and the United States. These countries continue to act as key financial intermediaries and investment channels into India.
RBI Views Trend as a Sign of Market Maturity
Despite the sharp decline, the Reserve Bank of India (RBI) offered a more optimistic interpretation in its May 2025 ‘State of the Economy’ report. According to the central bank, the decline in net FDI reflects the maturity of India’s capital markets, where foreign investors can both enter and exit freely without systemic disruption.
The report emphasized that India’s investment environment continues to remain fundamentally sound, though it acknowledged the need to stabilize long-term capital retention and curb volatility caused by large-scale disinvestments.
