India’s FDI inflows surge to $8.8 billion in April

Gross inward foreign direct investment (FDI) inflows into India surged to $8.8 billion in April this year, higher than $5.9 billion in March and $7.2 billion in April 2024, according to the RBI's monthly bulletin released on Wednesday. 

Manufacturing and business services accounted for nearly half of the gross FDI inflows in this month.

India ranked 16th globally in FDI inflows and recorded $114 billion in greenfield investment in digital economy sectors over the last five years (2020-2024), the highest among all countries in the Global South, the bulletin states.

Foreign portfolio investment (FPI) recorded net inflows of $1.7 billion in May 2025, driven by the equity segment. Equities gained for the third consecutive month as the India-Pakistan ceasefire, the US-China trade truce, and better-than-expected corporate earnings results in Q4:2024-25 lifted investor sentiment and spurred portfolio rebalancing towards Indian assets.

Telecommunication, services, and capital goods emerged as the top recipient sectors. The debt segment, which had experienced outflows in the previous month, observed a pause in net withdrawals in May, even as the yield differential between Indian and US government bonds remained below 2 per cent for most of the month, according to the bulletin.

Non-Resident Indian (NRI) deposits rose to $165.43 billion during April this year, up from $164.68 billion in the same month of the previous year.

Foreign Currency Non-Resident Bank (FCNR(B)) deposits rose 9 per cent year-on-year in April 2025, with outstanding balances increasing to $33.08 billion from $30.26 billion in April 2024.

This marks the sharpest percentage growth among the three deposit schemes, despite its smaller share in the overall pie. The monthly inflow under FCNR(B) deposits stood at $483 million in April 2025, compared to a provisional $272 million in April 2024–26.

The build-up in forex reserves also helped to strengthen the rupee and reflects a strong external balance position, which is sufficient to finance more than 11 months of the country’s exports.

"The Indian rupee (INR) appreciated by 0.4 per cent month-on-month vis-à-vis the US dollar and exhibited low volatility during May 2025. Uncertainty surrounding the US trade and its fiscal policy contributed to a general strengthening of EME currencies vis-à-vis the US dollar," the bulletin added.

Picture Courtesy: IANS