Gross FDI into India is holding up, but net FDI is still weak due to higher repatriation and growing outward investments. Misryoum expects the pattern to persist near term.
India’s foreign direct investment picture is improving at the front end, but weakening in the balance-sheet reality. Gross inflows look strong, while net FDI remains subdued—an important distinction many headlines miss.
Misryoum reports a mixed FDI outlook in a recent assessment: gross FDI is expected to stay well-supported, helped by both greenfield and brownfield projects.. That matters because gross flows—money coming into the country—tend to reflect deal flow and investor appetite.. Yet the same report flags a persistent drag on net FDI, which is what ultimately remains after profits and capital are repatriated and after Indian firms invest outward.
The core message is straightforward: investors may be putting more capital into India, but more of the money leaving the system is also rising.. Higher repatriation linked to an active deal pipeline and exits by private equity and venture capital are part of the reason, along with increasing outward FDI by Indian companies.. In other words, inflows are not translating cleanly into “net additions” to India’s external financing position.
To understand the gap, it helps to separate the accounting from the narrative.. Gross FDI refers to total foreign money entering India.. Net FDI subtracts repatriations—profits or capital sent back home by foreign investors—and also takes account of outward investment by domestic firms.. When repatriation stays high, net FDI can stay near a low even while gross inflows rise.
In the data cited, gross FDI (equity) rose to USD 90.8 billion on a 12-month trailing basis for January 2026, up 13% from USD 80.3 billion in January 2025.. Gross FDI excluding repatriation improved to USD 36.3 billion, reaching a three-year high and growing 38.4% year-on-year.. The picture on the inflow side is therefore visibly stronger.
Net FDI, however, remained near an all-time low at USD 0.5 billion for January 2026 on a 12-month trailing basis.. The report points to repatriation staying above USD 50 billion for a second consecutive year and outward FDI rising to USD 35.8 billion—up 2.6 times over two years.. That combination has a simple implication: even if foreign capital is arriving, a larger portion is being pulled back or offset by Indian companies investing abroad.
Why gross FDI strength may not soothe markets
There’s also a psychological factor. Gross numbers can look reassuring in dashboards, but the country’s external position depends on net transfers. When the net figure stays weak, it can limit the “buffer” that steady investment typically provides.
Sector mix shows where optimism is coming from
What to watch next: deal exits and outward investment
Another angle is the global context.. While worldwide FDI flows reached USD 1.6 trillion in 2025, growing 14% year-on-year, Asia’s flows declined slightly in percentage terms.. Yet flows to India, excluding repatriation, rose 44% year-on-year, helping improve global market share to a three-year high of 2.4%.. That suggests India remains attractive on inflows—even if the net translation is still constrained.
Taken together, the pattern looks like a phase where investment momentum exists, but the balance-sheet outcome is muted by a higher “outflow through repatriation” and offsetting outward investment.. If the drivers behind repatriation and outward FDI cool, net figures could improve; if they persist, gross strength may continue to coexist with a weaker net story.