<p>Mumbai: India's net foreign direct investment (FDI) rebounded sharply in FY26 but the capital flows remained short of financing the current account deficit (CAD), the Reserve Bank said on Friday.</p>.<p>Net FDI inflows stood at $7.7 billion in 2025-26, a sharp rise from $1 billion in 2024-25, though they remained below $10.2 billion in 2023-24 and substantially lower than $28 billion in 2022-23, the RBI annual report showed.</p>.<p>The rebound in net FDI came alongside a rise in gross inward FDI inflows to $94.5 billion in 2025-26, up from $80.6 billion a year ago.</p>.<p>However, repatriation and disinvestment by foreign investors increased to $53.6 billion, while outward FDI by Indian companies rose to $33.3 billion, limiting net inflow gains.</p>.Central bank must let rupee depreciate; use liquidity tools, not rate hikes, to curtail inflation: Former RBI Governor .<p>"Within capital flows, FDI stood higher, both on gross and net basis, during 2025-26," the RBI said, adding that according to fDi Markets India ranked second globally in greenfield FDI announcements during 2025-26 after the US.</p>.<p>The central bank said the services sector accounted for a major share of FDI equity inflows during 2025-26, followed by manufacturing. Singapore, the US, Mauritius, Japan, the Netherlands, and the UAE together contributed around four-fifths of total inflows.</p>.<p>However, the RBI noted that the global investment environment remained challenging, and net capital flows during April-December 2025 moderated and fell short of financing the CAD, resulting in a depletion of foreign exchange reserves by $30.8 billion on a balance of payments basis, excluding valuation effects, during the period.</p>.<p>Foreign portfolio investment (FPI) flows remained volatile during the year, with net outflows of $16.5 billion in 2025-26, driven mainly by the equity segment. In March 2026 alone, net FPI outflows stood at $13.1 billion, triggered by the outbreak of the West Asia conflict on February 28, 2026, the RBI said.</p>.<p>The debt segment, however, witnessed modest inflows of $2.1 billion in 2025-26, reflecting investor preference for relatively safer assets amid global uncertainty, it said. </p>
<p>Mumbai: India's net foreign direct investment (FDI) rebounded sharply in FY26 but the capital flows remained short of financing the current account deficit (CAD), the Reserve Bank said on Friday.</p>.<p>Net FDI inflows stood at $7.7 billion in 2025-26, a sharp rise from $1 billion in 2024-25, though they remained below $10.2 billion in 2023-24 and substantially lower than $28 billion in 2022-23, the RBI annual report showed.</p>.<p>The rebound in net FDI came alongside a rise in gross inward FDI inflows to $94.5 billion in 2025-26, up from $80.6 billion a year ago.</p>.<p>However, repatriation and disinvestment by foreign investors increased to $53.6 billion, while outward FDI by Indian companies rose to $33.3 billion, limiting net inflow gains.</p>.Central bank must let rupee depreciate; use liquidity tools, not rate hikes, to curtail inflation: Former RBI Governor .<p>"Within capital flows, FDI stood higher, both on gross and net basis, during 2025-26," the RBI said, adding that according to fDi Markets India ranked second globally in greenfield FDI announcements during 2025-26 after the US.</p>.<p>The central bank said the services sector accounted for a major share of FDI equity inflows during 2025-26, followed by manufacturing. Singapore, the US, Mauritius, Japan, the Netherlands, and the UAE together contributed around four-fifths of total inflows.</p>.<p>However, the RBI noted that the global investment environment remained challenging, and net capital flows during April-December 2025 moderated and fell short of financing the CAD, resulting in a depletion of foreign exchange reserves by $30.8 billion on a balance of payments basis, excluding valuation effects, during the period.</p>.<p>Foreign portfolio investment (FPI) flows remained volatile during the year, with net outflows of $16.5 billion in 2025-26, driven mainly by the equity segment. In March 2026 alone, net FPI outflows stood at $13.1 billion, triggered by the outbreak of the West Asia conflict on February 28, 2026, the RBI said.</p>.<p>The debt segment, however, witnessed modest inflows of $2.1 billion in 2025-26, reflecting investor preference for relatively safer assets amid global uncertainty, it said. </p>