India recorded robust gross Foreign Direct Investment (FDI) inflows during May and June 2025, highlighting continued global investor confidence in its growth story. However, net FDI inflows moderated, reflecting higher outflows and repatriations.
The trend underscores the dual reality of India’s investment landscape: while the country remains a strong magnet for new capital, challenges persist in sustaining net inflows amid global volatility and corporate profit transfers.
Gross FDI Remains Strong
According to official data, India continued to attract strong gross FDI commitments across manufacturing, digital infrastructure, and renewable energy. Multinational corporations are expanding operations in India as part of the China+1 strategy, leveraging India’s large market size and policy reforms.
The resilience of gross inflows shows India’s attractiveness as a long-term investment destination despite trade tensions and global economic uncertainty.
Net FDI Moderation Explained
While gross inflows remained high, net FDI moderated due to:
Repatriation of earnings by foreign firms.
Higher outward investment by Indian companies exploring overseas expansion.
Global investors rebalancing portfolios amid currency and market volatility.
This signals that while India remains competitive, ensuring long-term retention of capital is equally critical.
Policy and Market Implications
For policymakers, the divergence between gross and net FDI highlights the importance of not just attracting investments but also creating conditions for capital stickiness. Stable tax regimes, consistent policies, and ease of doing business will be key to reducing repatriations.
For businesses, moderated net inflows may signal tighter capital availability in certain sectors, pushing them to focus on productivity and innovation.
Why This Matters
For Policymakers: Reinforces the need to strengthen domestic conditions for sustained FDI.
For Investors: Confirms India’s role as a strong gross FDI destination despite global headwinds.
For Industry: Highlights opportunities but also the importance of regulatory stability for long-term capital retention.
India’s FDI story remains strong, but to achieve its Viksit Bharat 2047 vision, it must ensure not just inflows but also consistent retention and reinvestment.
