For the second month in a row, India witnessed a net outflow of Foreign Direct Investment (FDI) in October 2025, underscoring persistent concerns about foreign capital moving out of the country. According to the latest data released by the Reserve Bank of India (RBI), the net FDI outflow stood at $1.55 billion during the month.
Understanding the Net Outflow Dynamics
This follows a net outflow of $1.66 billion recorded in September 2025. The net FDI figure is calculated after accounting for two major components: repatriations of investments and profits by foreign companies, and overseas investments made by Indian companies. In October, these two outflows combined crossed the $8 billion mark for the second consecutive month, a historical first.
Specifically, overseas investments by Indian firms amounted to $3.09 billion, while foreign investors repatriated just under $5 billion. The total combined outflow of $8.08 billion was lower than September's $8.67 billion but was 11 per cent higher compared to the same period last year.
Year-to-Date Picture and Sectoral Trends
Despite the recent outflows, the broader picture for the current fiscal year shows improvement. For the first seven months (April-October) of the financial year 2025-26, India has seen a net FDI inflow of $6.20 billion. This is a significant jump from the less than $1 billion net inflow recorded for the entire previous financial year (2024-25).
On a gross basis, which does not account for outflows, FDI inflows into India in October were $6.54 billion. This was slightly lower than the $7 billion in September and $7.17 billion in October 2024.
The RBI's monthly State of the Economy report highlighted key trends in outward FDI. Singapore, the United States, and the United Arab Emirates (UAE) were the top destinations, accounting for more than half of all overseas investments by Indian companies. Sector-wise, a staggering 90 per cent of outward FDI was directed towards financial, insurance, and business services, followed by wholesale, retail trade, and manufacturing.
Impact on the Rupee and Government's Stance
The substantial outflows have added pressure on the Indian rupee, which hit record lows against the US dollar in December, breaching the 90 and 91 marks. However, intervention by the RBI has provided some stability, with the rupee closing at 89.65 per dollar on the day the data was released.
The trend has drawn the attention of policymakers. Chief Economic Advisor V. Anantha Nageswaran acknowledged the changing global FDI landscape. He cited rising interest rates in developed nations and a global push for localising supply chains as factors forcing India to compete not only with other emerging economies but also with richer nations seeking to onshore production.
Nageswaran explained that the rise in overseas investments by Indian entities is partly a strategic move to access foreign markets, as "in order to sell into those markets, you have to be present there these days." Simultaneously, he stressed the need for India to enhance its efforts to attract FDI, stating, "we need to up our game with respect to courting FDI, courting global supply chain companies to come here." He emphasized that attracting investments is crucial for boosting exports and gaining access to financial resources and technology.
The cumulative data for the first seven months of FY26 shows that total outflows—comprising Indian overseas FDI and foreign repatriations—have reached $52.13 billion, up from $47.26 billion in the same period last year. In a related development, foreign portfolio investors have also been net sellers in the equity markets, pulling out $17.73 billion on a net basis so far in 2025.
