Patient capital trusts India as hot money exits; FDI inflow rises 17% YoY

India's foreign direct investment (FDI) inflows increased 17.2% year-on-year to $94.5 billion in 2025-26, aided by overseas investor interest despite global macroeconomic uncertainty and volatile capital flows, according to the Reserve Bank of India's latest monthly bulletin.

Gross FDI inflows stood at $94.5 billion in 2025-26 compared with $80.6 billion in the previous year, while net FDI inflows increased sharply to $7.7 billion from $1 billion a year ago.

"On the capital account, gross FDI has been encouraging," the RBI said, adding that inflows are expected to remain robust amid a recent wave of greenfield investment announcements, particularly in the finance and technology sectors.


The central bank said that March marked the second consecutive month of positive net FDI inflows, despite moderation in gross inflows, aided by lower repatriation and outward FDI. Outward FDI also eased in March, with more than half of the investments directed towards Singapore, the UAE and the Netherlands.

Meanwhile, external commercial borrowings moderated to $43 billion in 2025-26 from $61.2 billion a year earlier, as Indian companies turned cautious on overseas borrowings amid elevated global interest rates and relatively attractive domestic funding conditions.

The RBI also flagged continued pressure from foreign portfolio investor (FPI) outflows. FPIs remained net sellers in April and May amid geopolitical tensions and uncertainty in West Asia, with cumulative outflows of about $10 billion so far in 2026-27, largely from equities.