FDI Inflows Jump to $8.8 Billion in April as India Attracts More Investment

India witnessed a sharp rise in gross foreign direct investment (FDI) inflows in April 2025, reaching $8.8 billion, according to the Reserve Bank of India’s (RBI) latest monthly bulletin.

This marks a significant increase compared to $5.9 billion in March and $7.2 billion in April 2024. The surge was largely driven by inflows into the manufacturing and business services sectors, which together contributed to nearly half of the total.

During the five-year period between 2020 and 2024, India received $114 billion of greenfield investments in digital economy industries, the highest amongst Global South countries. In the global FDI ranking, India is at 16th rank as of now, which is a signal of increasing confidence among international investors.

Aside from FDI, foreign portfolio investment (FPI) witnessed net inflows of $1.7 billion in May 2025 led by solid performance in the equity markets. This is the third consecutive month of net equity inflows, led by a host of geopolitical and economic events such as India-Pakistan ceasefire, US-China trade truce, and strong Q4 corporate earnings in 2024–25.

Industries like telecommunications, services, and capital goods came out as the major gainers of these equity inflows. On the other hand, the debt market, which witnessed outflows during the last month, witnessed a lull in net withdrawal, even though the yield gap between Indian and US government papers remained at less than 2% for the major part of May.

Deposits of Non-Resident Indians (NRIs) also indicated a positive trend. Total deposits of NRIs as of April 2025 stood at $165.43 billion, higher than $164.68 billion as of April 2024. Of the three categories of NRI deposit schemes, Foreign Currency Non-Resident Bank [FCNR(B)] deposits had the highest year-on-year growth at 9%, with outstanding balances increasing to $33.08 billion from $30.26 billion during the previous year.

April 2025 witnessed FCNR(B) monthly inflows of $483 million, a sharp contrast from the provisional $272 million for the same period last year. The rise helped register an increase in the foreign exchange reserves of the nation, further buttressing India's external sector strength. Per RBI, the reserves now available will cover over 11 months of imports.

The bulletin further stated that the Indian rupee (INR) strengthened by 0.4% against the US dollar on a month-on-month basis in May 2025, with low volatility being seen during the month. The performance of the rupee was supported by stronger capital inflows and forex reserves, while wider global forces—like uncertainty regarding US trade and fiscal policy—supported emerging market currencies in general.

"The Indian rupee (INR) strengthened by 0.4 per cent month-on-month against the US dollar and registered low volatility for the month of May 2025. Uncertainty regarding the US trade and its fiscal policy led to a broad-based appreciation of EME currencies against the US dollar," the RBI bulletin observed.

With global and domestic economic markers still reflecting strength, India's investment attractiveness and financial stability seem to be rising for the second half of the year.