Overseas Investors Repatriate Record $97.7 Billion from Indian Assets in FY25

Overseas investors repatriated a record $97.7 billion from Indian assets in FY25, up from $87.5 billion in FY24, driven by strong FDI inflows, bond yields, and Indian debt’s inclusion in the JPMorgan bond index. Income from foreign exchange reserves rose 33% to $21.7 billion, helping narrow the current account deficit. Balanced investment flows, with Indian firms earning more abroad, reduced past imbalances. India’s favourable policies and global financial integration enhance its appeal as a premier investment destination, solidifying its economic prominence.

India's reputation as a promising investment hub received a significant boost as overseas investors repatriated an unprecedented $97.7 billion in income from their holdings in the country's financial and business sectors during FY25, according to data released by the Reserve Bank of India (RBI). This marks a sharp rise from the $87.5 billion recorded in FY24, underscoring the growing appeal of Asia's second-largest economy among global investors.

The repatriated income, which includes dividends, interest earnings, and profits, came from a range of investments such as bonds, equities, and direct participation in Indian companies. This surge is attributed to robust foreign direct investment (FDI) inflows and higher earnings from investments in Indian debt instruments, especially after local debt was included in the JPMorgan bond index last year.

FDI and Debt Investments Drive Gains

Significant contributions to this record-breaking repatriation came from returns on FDI in Indian firms, where overseas shareholders benefitted from substantial dividends and profits. Additionally, Indian debt instruments attracted considerable foreign portfolio inflows, supported by favourable domestic bond yields.

"The rise in income is a result of strong gross FDI inflows and the inclusion of Indian bonds in global indices," noted Gaura Sengupta, Chief Economist at IDFC First Bank. She highlighted that domestic debt investments performed well, benefiting from lower bond yields.

Although the RBI report does not delineate the precise sources of dividend and profit income, private equity exits appeared to play a notable role in the broader investment income figures.

Improved Returns on Reserves

India also saw a 33% increase in income from its foreign exchange reserves, with earnings climbing to $21.7 billion in FY25 compared to $15.8 billion the previous year. This uptick contributed significantly to narrowing the deficit in the current account's investment income segment. The deficit stood at $52.6 billion in FY25, showing a slight improvement over the $53.6 billion deficit recorded in FY24.

Balanced Investment Dynamics

The rise in repatriated investment income coincided with Indian companies expanding their presence in overseas markets. As a result, the outward flow of investments by Indian firms generated a higher inflow of related revenues. This two-way investment dynamic has helped balance the investment income component of the current account—an area that previously posed consistent challenges.

"Repatriation of income by global investors was offset by an increase in earnings from Indian investments abroad," explained Radhika Rao, Executive Director at DBS Bank. "This shift is likely to make the investment income segment more balanced in the future, reducing its historical drag on the current account."

A Promising Outlook

The record-breaking figures for FY25 underscore India’s growing prominence on the global financial stage. With favourable policies, strong economic fundamentals, and deeper integration into global financial indices, the country remains a compelling destination for foreign investors looking for robust returns.

As investment flows continue to rise, India is poised to further solidify its standing as a global economic powerhouse, attracting more capital and fostering mutually beneficial opportunities for both domestic and international stakeholders.