The Crossbill News Desk
India’s net foreign direct investment (FDI) plunged to a historic low in the fiscal year 2024-25, falling 96.5% to just $353 million, according to the Reserve Bank of India’s (RBI) latest monthly bulletin released on May 21.
The sharp decline marks a significant drop from the $10 billion net FDI recorded in the previous fiscal year and reflects a mix of aggressive repatriation by foreign investors and rising outward investment by Indian firms.
The RBI attributed the contraction in net FDI to a surge in fund repatriation as foreign investors cashed out through highly profitable initial public offerings (IPOs), coupled with Indian companies stepping up overseas investments to take advantage of shifting global supply chains.
"Net FDI moderated…reflecting the rise in net outward FDI and repatriation FDI," the central bank noted.
Despite robust gross inflows, which actually rose 13.7% to $81 billion in FY25, net figures were dragged down by a spike in capital outflows. Investors pulled out $49 billion from India during the year, compared to $41 billion in FY24.
High-profile divestments included exits by Alpha Wave Global and Partners Group, which sold shares in marquee IPOs like Swiggy and Vishal Mega Mart.
The Indian Venture Capital and Alternate Capital Association (IVCA), in partnership with Ernst & Young (EY), reported that private equity and venture capital exits reached $26.7 billion in FY25, up 7% year-on-year. While open market deals dominated, IPOs backed by private investors also gained significant traction.
Notably, Hyundai’s promoters reduced their stake during a blockbuster Rs 27,870 crore listing, while a major Swiggy investor is reported to have netted over $2 billion following the food delivery firm’s public debut. Other major divestments during the year included Singtel’s sale of its stake in Bharti Airtel and British American Tobacco’s reduction of its holding in ITC in March 2024.
These exits often coincided with surging equity markets, including a major rally in September 2024 that saw stock indices hit all-time highs.
While the dramatic drop in net FDI may raise concerns, some analysts interpret the development as a sign of market maturity. The IVCA-EY report observed that such large-scale exits suggest that India now offers an efficient investment ecosystem, enabling foreign investors to both enter and exit with ease — a positive indicator for long-term economic resilience.
Nevertheless, the RBI cautioned that despite the uptick in gross FDI inflows, the investment remained concentrated, with over 60% directed toward manufacturing, financial services, energy, and telecommunications sectors.
Moreover, net 'stable' FDI flows for the year were significantly lower than the more volatile portfolio flows, which reached $2.67 billion, further underscoring the shift in capital movement patterns.
The record-low net FDI highlights both the opportunities and volatility in India’s investment climate amid a maturing economy and evolving global dynamics.
The sharp decline marks a significant drop from the $10 billion net FDI recorded in the previous fiscal year and reflects a mix of aggressive repatriation by foreign investors and rising outward investment by Indian firms.
The RBI attributed the contraction in net FDI to a surge in fund repatriation as foreign investors cashed out through highly profitable initial public offerings (IPOs), coupled with Indian companies stepping up overseas investments to take advantage of shifting global supply chains.
"Net FDI moderated…reflecting the rise in net outward FDI and repatriation FDI," the central bank noted.
Despite robust gross inflows, which actually rose 13.7% to $81 billion in FY25, net figures were dragged down by a spike in capital outflows. Investors pulled out $49 billion from India during the year, compared to $41 billion in FY24.
High-profile divestments included exits by Alpha Wave Global and Partners Group, which sold shares in marquee IPOs like Swiggy and Vishal Mega Mart.
The Indian Venture Capital and Alternate Capital Association (IVCA), in partnership with Ernst & Young (EY), reported that private equity and venture capital exits reached $26.7 billion in FY25, up 7% year-on-year. While open market deals dominated, IPOs backed by private investors also gained significant traction.
Notably, Hyundai’s promoters reduced their stake during a blockbuster Rs 27,870 crore listing, while a major Swiggy investor is reported to have netted over $2 billion following the food delivery firm’s public debut. Other major divestments during the year included Singtel’s sale of its stake in Bharti Airtel and British American Tobacco’s reduction of its holding in ITC in March 2024.
These exits often coincided with surging equity markets, including a major rally in September 2024 that saw stock indices hit all-time highs.
While the dramatic drop in net FDI may raise concerns, some analysts interpret the development as a sign of market maturity. The IVCA-EY report observed that such large-scale exits suggest that India now offers an efficient investment ecosystem, enabling foreign investors to both enter and exit with ease — a positive indicator for long-term economic resilience.
Nevertheless, the RBI cautioned that despite the uptick in gross FDI inflows, the investment remained concentrated, with over 60% directed toward manufacturing, financial services, energy, and telecommunications sectors.
Moreover, net 'stable' FDI flows for the year were significantly lower than the more volatile portfolio flows, which reached $2.67 billion, further underscoring the shift in capital movement patterns.
The record-low net FDI highlights both the opportunities and volatility in India’s investment climate amid a maturing economy and evolving global dynamics.
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