India’s Foreign Direct Investment Surges to Four-Year High of $11.11 billion

India recorded its highest Foreign Direct Investment (FDI) inflows in over four years, with $11.11 billion in July 2025, driven by contributions from Singapore and key sectors like manufacturing and services. Net FDI rose to $5.05 billion, reflecting economic resilience amid global uncertainties. Recent credit rating upgrades by S&P and government reforms, including GST cuts, have bolstered investor confidence. This surge follows a challenging fiscal year but signals a promising economic outlook.

Foreign Direct Investment (FDI) in India reached a significant milestone in July, hitting its highest level in over four years, according to data released by the Reserve Bank of India (RBI) on Wednesday. Even before S&P Global Ratings upgraded India’s credit rating and the government unveiled a series of economic reforms, FDI inflows surged to $11.11 billion — the most robust figure since May 2021, when gross inflows totaled $12.32 billion. This marks a promising turnaround for an economy navigating global uncertainties.

July’s FDI inflows represent a sharp rise compared to $9.57 billion in June. The year-on-year figures are even more striking, with July 2024’s inflows of $5.54 billion being less than half of this year's numbers.

Key Contributors to the FDI Boom

The RBI’s monthly State of the Economy report highlighted that Singapore emerged as the top investing country, followed by the Netherlands, Mauritius, the United States, and the United Arab Emirates. Together, these nations accounted for over 75% of the total inflows. Among the sectors, manufacturing stood out as the largest recipient, followed closely by services such as communication, computer, and business services.

On a net basis — which accounts for repatriated investments and Indian companies’ overseas investments — $5.05 billion flowed into India in July, a substantial jump from $2.51 billion in June. This contrasts starkly with July 2024, when net FDI showed an outflow of $2.69 billion.

Economic Confidence on the Rise

FDI serves as a vital indicator of an economy’s health and the global confidence it inspires among investors. The recent uptick aligns with S&P Global Ratings’ decision on August 14 to upgrade India’s credit rating to BBB from BBB-. This upgrade is expected to encourage further investment over the medium and long term. Adding to the momentum, Prime Minister Narendra Modi announced a series of economic reforms on August 15, including reductions in Goods and Services Tax (GST) rates, which took effect earlier this week.

Rebounding from a Challenging Year

The recent surge in FDI inflows comes after a challenging 2024-25 fiscal year. While gross FDI inflows reached $80.62 billion during that period, net FDI dramatically fell to $959 million, compared to $10.15 billion in 2023-24. This sharp decline was driven by two key factors: a 16% increase in repatriations by foreign companies, which totaled $51.49 billion, and a staggering 69% rise in overseas direct investments by Indian companies, amounting to $28.17 billion.

In the current fiscal year, however, the scenario appears far more optimistic. Between April and July 2025, net FDI reached $10.75 billion — three times the figure for the same period last year. Gross FDI inflows rose by 33% to $37.71 billion, while repatriations by foreign firms dropped by 6% to $16.28 billion. On the flip side, outward investments by Indian companies increased by 44% to $10.68 billion.

A Balanced Shift in Outflows

The RBI’s report noted a notable moderation in both repatriated FDI and Indian firms’ overseas investments during July. Indian companies primarily directed their outward FDI toward financial, insurance, and business services, as well as manufacturing. The United States, Singapore, the Netherlands, Mauritius, and the United Kingdom were the top destinations for these investments. This moderation in outflows, coupled with strong inbound FDI, contributed to the rise in net FDI.

India’s steady FDI performance comes at a time of significant global uncertainty in trade, policy, and financial markets. The country’s ability to attract investment amid these challenges reflects its growing economic resilience and appeal as a global investment destination. With recent reforms and an improved credit rating, the outlook for sustained FDI growth appears promising, reinforcing India’s position as one of the most attractive emerging markets for international investors.