India pulled in a lot more foreign investment in FY26. But money also flowed out at a faster pace — and that two-way movement is what makes this year’s numbers worth paying attention to.
Gross FDI into India touched USD 94.5 billion in FY26, up from USD 80.6 billion the year before. Net FDI — the amount that actually stays after accounting for money sent back out — rose to USD 7.7 billion from barely USD 1 billion in FY25. Given that global markets were choppy and geopolitical tensions were running high through much of the year, these numbers reflect a reasonable degree of confidence in India’s economic outlook.
But the gap is growing
Here is where it gets interesting. The difference between gross and net FDI has widened noticeably. A lot of money is coming in, but a significant chunk is also leaving. The obvious question is why.
One reason is that Indian companies are increasingly thinking beyond domestic borders. Firms from India are now acquiring companies abroad, setting up international subsidiaries, and investing across sectors ranging from technology and energy to logistics and financial services. Singapore, the UAE, the Netherlands, the United States, Mauritius, and the UK were among the top destinations where Indian capital flowed during the year.
The other reason is less about ambition and more about exits. Some foreign investors chose to repatriate funds or divest holdings during the year. This pressure was visible enough that net FDI actually slipped into negative territory in August, September, and October 2025. The yearly figure stayed positive only because inflows picked up strongly in the months that followed.
The rest of the capital story
It was not just FDI that told a mixed story. Foreign portfolio investors — those who put money into stocks and bonds rather than businesses — pulled out a net USD 10 billion from India in the early weeks of FY27 up to May 20, 2026. Global risk aversion drove most of that, with equity markets bearing the brunt.
On the borrowing side, Indian companies went noticeably quiet. External commercial borrowing registrations fell to USD 43 billion in FY26 from USD 61.2 billion the previous year. High interest rates globally and an uncertain outlook made firms think twice before taking on overseas debt.
What it all adds up to
India keeping net FDI positive through a turbulent year says something real about its fundamentals — domestic consumption, infrastructure push, and a policy environment that has broadly stayed investor-friendly. But FY26 also signals a shift in India’s role in the global capital story.
The country is no longer just a place where foreign money lands. Indian companies are now deploying capital across the world with growing confidence. Managing that two-way flow — and making sure the architecture supporting it keeps pace — will matter a great deal in the years ahead.
