RBI Governor Emphasises Gross FDI Growth Despite Net Investment Moderation

(MENAFN- KNN India) New Delhi, Jun 6 (KNN) Reserve Bank of India Governor Sanjay Malhotra addressed concerns regarding India's foreign direct investment performance on Friday, advocating for a focus on gross FDI figures rather than net flows to better assess the country's investment attractiveness.

The Governor's remarks came during the announcement of the latest monetary policy decisions, as recent data showed a significant decline in net FDI inflows.

Malhotra emphasised that gross FDI provides a more comprehensive understanding of India's investment landscape compared to net FDI figures, which factor in outbound investments and repatriations.

According to the RBI data, gross FDI demonstrated strong performance in the fiscal year 2025, recording a substantial 14 per cent year-on-year increase to reach USD 81 billion.

The Governor characterised this growth as evidence of India's continued appeal as an investment destination.

The moderation in net FDI has been attributed primarily to increased repatriation activities by foreign companies operating in India.

Malhotra described this trend as indicative of a maturing market, suggesting that the seamless entry and exit capabilities available to foreign investors reflect the robustness and depth of India's financial infrastructure.

Net inward FDI flows experienced a dramatic decline in fiscal year 2025, dropping to USD 0.4 billion from USD 10.1 billion recorded in the previous fiscal year 2023-24.

This significant reduction has generated concern among market analysts and investment observers. Concurrently, repatriation by foreign investors increased by 16 per cent to reach USD 51.5 billion during the same period.

The RBI Governor highlighted that robust gross FDI figures, combined with healthy outward investment flows from Indian companies, demonstrate India's evolving position in the global investment ecosystem.

He noted that this pattern reflects both sustained international confidence in India's domestic growth prospects and the expanding global footprint of Indian multinational corporations.

India's outward FDI registered notable growth, increasing by 75 per cent in fiscal year 2025 to reach USD 29.2 billion, compared to USD 16.7 billion in the preceding year.

The central bank has identified a strategic shift in India's outward investment patterns, with an increasing focus on developed economies. The average share of investments directed toward developed markets rose to 51.1 per cent during the 2019-2024 period.

The Reserve Bank of India previously noted in its May 2025 monthly bulletin that India's rising outward FDI aligns with broader global trends, where emerging market economies are becoming significant sources of foreign investment.

According to the RBI's annual report, the share of G20 Emerging Market countries in global FDI outflows is projected to increase from 9.7 per cent in 2009 to 16.5 per cent in 2023, reflecting the growing investment capacity of developing economies.

(KNN Bureau)

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