Rise in repatriation sign of mature market: RBI Governor on moderation in net FDI

India continues to remain an attractive investment destination and rise in repatriation of funds is a sign of a mature market where foreign investors can enter and exit smoothly, Reserve Bank Governor Sanjay Malhotra said on Friday (June 6, 2025). Photo credit: X/RBI

India continues to remain an attractive investment destination and rise in repatriation of funds is a sign of a mature market where foreign investors can enter and exit smoothly, Reserve Bank Governor Sanjay Malhotra said on Friday (June 6, 2025).

Gross foreign direct investment (FDI) inflows remained strong, rising by around 14% to $81 billion in 2024-25, from $71.3 billion a year ago. However, net FDI inflows moderated to $0.4 billion in 2024-25, from $10.1 billion a year ago.

In 2024-25, foreign portfolio investment (FPI) to India dropped sharply to $1.7 billion, as foreign portfolio investors booked profits in equities.

The moderation in net FDI "is on account of a rise in repatriation and net outward FDI, while gross FDI actually increased by 14 per cent," Mr. Malhotra said, while unveiling the June monetary policy.

Rise in repatriation is a sign of a mature market, where foreign investors can enter and exit smoothly, he said, adding "high gross FDI indicates that India continues to remain an attractive investment destination".

The governor also said that with the moderation in trade deficit in Q4:2024-25, alongside strong services exports and remittance receipts, the current account deficit (CAD) for 2024-25 is expected to remain low.

Furthermore, despite rising geopolitical uncertainties and trade tensions, India's merchandise trade remained robust in April 2025.

As imports grew faster than exports, the trade deficit, however, widened during the month.

"Going forward, net services and remittance receipts are likely to remain in surplus, counterbalancing the rise in trade deficit. The CAD for 2025-26 is expected to remain well within the sustainable level," Mr. Malhotra said.

As on May 30, 2025, India's foreign exchange reserves stood at $691.5 billion, down from $692.721 billion during the week ended May 23. These are sufficient to fund more than 11 months of goods imports and about 96 per cent of external debt outstanding.

Overall, India's external sector remains resilient as key external sector vulnerability indicators continue to improve, the governor said.

Published - June 06, 2025 11:57 am IST