NEW DELHI: Amid concerns over the recent moderation in net foreign direct investment (FDI) into India, Reserve Bank of India Governor Sanjay Malhotra on Friday sought to provide clarity, urging stakeholders to consider gross FDI figures instead, which present a more accurate picture of India’s investment appeal.
“While net FDI is important from a foreign exchange reserves management perspective, when it comes to understanding the investment landscape, gross FDI matters far more,” Malhotra said while announcing the latest monetary policy decisions.
Net FDI, which deducts outbound investments and repatriations from the gross inflows, had moderated in FY25. However, the RBI chief emphasized that gross FDI actually rose sharply last year, registering a robust 14% year-on-year growth to reach $81 billion. “This is a strong indicator that India continues to be an attractive investment destination,” he added.
Malhotra attributed the moderation in net FDI primarily to higher repatriation of investments by foreign companies—something he described as a “sign of a maturing market.” He noted that the ability of foreign investors to enter and exit seamlessly reflects the depth and resilience of India’s financial ecosystem.
He further underlined that rising gross FDI reflects not just investor confidence in India’s domestic growth story but also the global expansion of Indian firms. “High gross FDI alongside healthy outflows from Indian multinationals showcases India’s growing role in the global investment landscape,” Malhotra noted.
Due to increased outward FDI and repatriation, net inwards FDI inflows dropped to $0.4 billion in FY25 from $10.1 billion in 2023-24, raising concern among a section of analysts. Repatriation by foreign investors also increased by 16% to $51.5 billion in FY25. The RBI pointed out another trend, where India’s outward investment has witnessed a shift towards developed economies, with the average share rising to 51.1% 2019-2024.
Earlier, RBI in its monthly bulletin for May 2025 had noted that India’s rising outward FDI rising (up 75% in FY25) was in tandem with the global trend where emerging market economies (EMEs) are emerging as a major source of foreign investment. The net outward FDI in FY25 was $29.2 billion, up from $16.7 billion in the previous year. The RBI annual report says the share of G20-Emerging Market (G20- EM) countries in global FDI outflows will increase from 9.7% in 2009 to 16.5% in 2023.