Let's find out why net foreign direct investment fell 96% to $353 million in FY25

The net FDI amount was $44 billion in 2020-21, decreasing to $10.1 billion in 2023-24, and ultimately dropping to only $353 million ($0.4 billion) in 2024-25.

Although total FDI inflows are strong and varied, net FDI is declining because of:

Increased repatriation by international firms (profit withdrawal, asset sales).

Growing foreign investment by Indian firms (international expansion).

In 2024-25, Indian firms allocated a total of $29.2 billion abroad, which is 75% more than the year before.

Gross Inflows: In FY25, gross FDI continued to be high, achieving a 13.7% year-on-year (Y-o-Y) increase, totaling $81 billion in flows.

Over 60% of total FDI inflows in FY25 were in the manufacturing, financial services, electricity and other energy, and communication services sectors.

Singapore, Mauritius, the UAE, the Netherlands, and the United States (US) represented over 75% of the total flows.

Net Overseas Direct Investment

Net FDI is the total gross FDI, which represents all incoming funds, subtracting the amounts repatriated by foreign firms operating in India and the outward FDI from Indian businesses.

Net FDI = Total FDI Inflows − (Repatriation by foreign companies + Outward FDI by Indian companies).

Essential Elements:

Gross FDI Inflows: The overall fresh investments by international entities into the nation. This involves establishing factories, purchasing local businesses, or broadening operations.

Repatriation & Disinvestment: Earnings or funds that international firms transfer back to their countries of origin. Involves the sale of assets or shares within domestic companies.

Outward FDI: Investments by local firms in overseas markets (for instance, purchases, establishing branches).

Positive Net FDI: Signifies that foreign investments entering the country exceed those leaving, typically viewed as a marker of economic appeal.

Low or Negative Net FDI: Could indicate that capital is exiting or that local companies are investing more overseas than foreign entities are investing domestically.