June 26, 2025
1 min read

FDI Inflows Hit $8.8 Billion

Top sectors drawing FPI interest included telecommunications, services, and capital goods. While the debt market had seen outflows earlier, net withdrawals paused in May despite a narrow yield gap between Indian and US bonds

India witnessed a sharp surge in foreign direct investment (FDI) inflows in April 2025, with gross inward FDI reaching $8.8 billion, according to the Reserve Bank of India’s monthly bulletin released on Wednesday. This marks a significant increase from $5.9 billion in March and $7.2 billion recorded in April 2024.

Manufacturing and business services accounted for nearly half of the total inflows, signalling sustained investor confidence in India’s core growth sectors. India also ranked 16th globally in FDI inflows and led the Global South in greenfield investments in digital sectors between 2020–2024, attracting a record $114 billion.
Foreign portfolio investment (FPI) also remained strong, registering net inflows of $1.7 billion in May 2025, buoyed by the equity segment. Positive geopolitical developments — including the India-Pakistan ceasefire and a US-China trade truce — alongside strong Q4 corporate earnings, helped boost investor sentiment.

Top sectors drawing FPI interest included telecommunications, services, and capital goods. While the debt market had seen outflows earlier, net withdrawals paused in May despite a narrow yield gap between Indian and US bonds.

Non-Resident Indian (NRI) deposits rose to $165.43 billion in April 2025, up from $164.68 billion a year ago. Among these, Foreign Currency Non-Resident Bank [FCNR(B)] deposits grew 9% year-on-year — the fastest growth among deposit categories — with balances rising to $33.08 billion.

The RBI also noted that India’s forex reserves were strong enough to cover over 11 months of imports, reinforcing a healthy external balance. Aided by reserve build-up, the Indian rupee appreciated by 0.4% month-on-month against the US dollar in May, with low volatility amid global fiscal policy uncertainties.

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