NEW DELHI: Amid the exodus of foreign portfolio investors (FPIs) from Indian equity markets, net foreign direct investment (FDI) inflows have provided a silver lining, rising 44% year-on-year to $13.8 billion during April-August 2026, up from $9.6 billion in the first five months of last fiscal.
According to the Reserve Bank of India’s (RBI) October bulletin released on Friday, net FDI stood at $3.3 billion in August, supported by sustained gross FDI inflows and a moderation in the pace of outward FDI.
The RBI data showed that gross FDI inflows rose 20% y-o-y to $11.1 billion during the April-August period, while net outward FDI increased 26.5% to $17.7 billion, compared with a 41.9% rise a year ago. In August, outward FDI flows moderated, with more than half directed towards Singapore, the Netherlands and the US.
India recorded negative net FDI flows from August to December 2025 before recovering in the final quarter of the previous financial year. In the current financial year, net FDI again slipped into negative territory in May and June as outward investments exceeded inward inflows.
Financial services, communication services, computer services and manufacturing accounted for 73% of total FDI equity inflows during April-August 2026. Singapore, Japan, Mauritius, the United Arab Emirates and the US were the major sources of inward FDI, together accounting for around 81% of total inflows.
The rebound in FDI comes amid a sustained sell-off by FPIs to the tune of $9.8 billion during April-August, data showed.
RBI also reported a sharp rise in its net dollar purchases in August, buying $43.26 billion on a net basis, more than double the $18.65 billion purchased in July. The increase came amid significant inflows of NRI deposits into banks.
India received around $136 billion under the RBI’s special dollar swap window, with Foreign Currency Non-Resident (Bank), or FCNR(B), deposits crossing $127 billion in August.
Meanwhile, RBI flagged concerns over rising inflationary pressures stemming from the West Asia crisis and recurring trade tensions, alongside multi-decade-high sovereign bond yields and elevated public debt. However, it noted that sustained domestic demand and the services sector continued to support economic growth.
