India’s net foreign direct investment (FDI) remained in the negative territory for the fourth month running, as outflows overshadowed the inflows by $1.61 billion during December last year, according to data released by the Reserve Bank of India (RBI) on Friday.
Even though gross FDI inflows rose to a five-month high of $8.58 billion in the month under review, the net FDI figure was (-) $1.61 billion due to an increase in Indian companies’ foreign direct investments and repatriation of past investments by foreigners.
Foreigners repatriated a record $7.45 billion in the last month of 2025, exerting pressure on the rupee as it fell past the 90- and 91-per-dollar marks and hit multiple fresh all-time lows.
Meanwhile, FDI by Indian companies also increased in December, rising to $2.75 billion– up 78% from November and 31% from December 2024.
Net FDI is calculated after adjusting for investments that are repatriated by foreign companies and overseas investments made by Indian companies.
Repatriation of FDI refers to foreign investors taking back money they had previously invested in India. This repatriation can be in the form of profits, dividend, or sale of assets.
The repatriation of funds by foreign investors, which surged to $7.45 billion, was the highest on record as per data available from the RBI.
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The amount was almost 40% higher compared to November as well as December 2024. Foreign investors are increasingly pulling out money invested in Indian assets via FDI, with the total for the first nine months of 2025-26 adding up to $44.45 billion, up 10% from the same period of 2024-25.
Much of the exit – or $42.62 billion — has been by way of foreign investors reducing their equity holdings.
“For outward FDI, key destinations were Singapore, the US, the UAE, the UK and the Netherlands and the major sectors included financial, insurance and business services, and wholesale/retail trade, restaurants, and hotels,” RBI staff said in the central bank’s monthly State of the Economy article, also published on Friday.
In the first nine months of 2025-26, overseas investments by Indian companies totalled $24.88 billion, up 35% year-on-year.
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This, in conjunction with the record repatriations, has led to net FDI inflows amounting to just under $4 billion this financial year so far, even though gross inflows have been 16% higher at $73.31 billion.
The RBI noted in the State of the Economy article that Singapore, the Netherlands, and Mauritius accounted for more than 80% of total gross FDI inflows in December, with the major recipient sectors being transport, manufacturing, computer services, and electricity and other energy generation, distribution and transmission.
Gross FDI inflows in 2025-26 are on track to exceed the $80.62 billion recorded in 2024-25.
Net FDI inflows in 2024-25 stood at a mere $959 million.
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The rupee has weakened sharply over the last 12 months or so, with weak FDI inflows being one contributing factor.
The other has been the exit of foreign portfolio investors (FPI) from Indian financial markets.
In 2025, FPIs net sold Indian shares worth almost $19 billion as concerns over the US’ 50% tariffs on Indian goods hurt sentiment. This continued in January, when FPIs’ share sales amounted to $4 billion.
However, the announcement on February 2 that India and the US had reached an interim agreement that would see the penal 25% tariff being removed and the reciprocal 25% tariff reduced to 18% has triggered a turnaround.
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As per latest data, foreign investors have purchased almost $2 billion of Indian equities so far this month, helping alleviate pressure on the rupee, which closed at 90.99 per dollar on Friday.