Gross foreign direct investment (FDI) inflows into India surged to 8.8 billion dollars in April this year, higher than 5.9 billion dollars in March and 7.2 billion dollars in April 2024. According to the RBI’s monthly bulletin, manufacturing and business services accounted for nearly half of the gross FDI inflows in April this year. India ranked 16th globally in FDI inflows and recorded 114 billion dollars in greenfield investment in digital economy sectors over the last five years (2020-2024), the highest among all countries in the Global South.
Foreign portfolio investment (FPI) recorded net inflows of 1.7 billion dollars in May 2025, driven by the equity segment. Equities gained for the third consecutive month as India-Pakistan ceasefire, US-China trade truce, and better-than-expected corporate earnings results in 4th Quarter 2024-25 fiscal lifted investor sentiment and spurred portfolio rebalancing towards Indian assets.
Telecommunication, services, and capital goods emerged as the top recipient sectors. The debt segment, which had experienced outflows in the previous month, observed a pause in net withdrawals in May, even as the yield differential between Indian and US government bonds remained below 2 per cent for most of the month. Non-Resident Indian (NRI) deposits rose to 165.43 billion dollars during April this year, up from 164.68 billion dollars in the same month of the previous year.
The build-up in forex reserves also helped to strengthen the rupee and reflects a strong external balance position, which is sufficient to finance more than 11 months of the country’s exports.
