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Sharp Decline in Net FDI to India: RBI

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RBI Grade BNABARD ESISEBI
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Context:

Net foreign direct investment (FDI) into India fell sharply to $1.5 billion during April 2024–February 2025, compared to $11.5 billion in the same period the previous year. The decline is attributed to higher repatriation by foreign investors and increased outward FDI by Indian firms.

Gross FDI Remains Strong

  • Gross FDI inflows rose 15.2% year-on-year to $75.1 billion during the 11-month period.
  • In comparison, the gross FDI inflow was $65.2 billion during April 2023–February 2024, according to RBI data.

Country-wise and Sector-wise FDI Breakdown

  • Singapore emerged as the top equity investor, contributing 29.8% of inflows, followed by Mauritius and the United States.
  • Manufacturing sector attracted the highest share of FDI (24.1%), followed by financial services and electricity sectors.

Increase in Repatriation and Outward FDI

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  • Repatriation/disinvestment by foreign investors in India increased to $48.9 billion, up from $40.7 billion a year ago.
  • Outward FDI by Indian firms surged to $24.8 billion, compared to $13 billion in the previous year.
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Global Investment Shift

  • The United States continues to be the top global destination for inward FDI and is now the second-largest destination for Indian ODI.
  • The shift in global capital flows is influenced by recent US policy announcements, leading multinationals to redirect investments toward the US.

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