Is foreign money really fleeing India? What FDI and FII numbers actually mean.
India’s net FDI dropped from $43 billion in FY20 to under $1 billion in FY25, but gross inflows surged to an all-time high of $81 billion. The gap is repatriation and Indian firms investing abroad.
Net FDI fell from $$43 billion in FY20 to just $about $1 billion in FY25, a collapse that made headlines worldwide.
Net foreign direct investment, gross inflows minus repatriation and Indian investment abroad · financial years 2000-01 to 2024-25 · RBI balance of payments
US$ million
About this chart
This chart shows the annual net foreign direct investment in US dollars from FY2001 to FY2025. Net FDI is what remains after subtracting repatriation and outward investment from gross inflows. The line climbs slowly, jumps to a peak of $$43 billion in 2019-20, and then plunges to $about $1 billion. That visual cliff is what every newsroom quoted. But the net figure is not a measure of fresh money coming in; it is the result of a subtraction. Reading it as a stand-alone number without the outflows is like judging a household's income by looking only at the savings account balance after all bills are paid. The real story lies in the flows that made the net number shrink.
Why this chart To confront the alarming headline number head-on and show the magnitude of the decline that caused the panic.
How to read it The line shows annual net FDI in US$ million. Notice the sharp drop after the 2019-20 peak.
Watch out Do not assume this line by itself tells you whether foreigners increased or decreased their investment in India.
The year-end headlines screamed a single number: net foreign direct investment fell to less than a billion dollars in 2024-25, down from 43 billion five years earlier. That sounds like a stampede. But it is not. The mistake is reading the net figure as if it were the gross. Foreign money is not fleeing India; the arithmetic of how we count it has changed. This is the real story, told chart by chart.
Why does everyone think foreign money is fleeing India?
Because the chart looks terrifying. Net FDI, the money that stays after outflows, stood at $43 billion in 2019-20 and collapsed to about $1 billion in 2024-25. On a screen, that is a cliff. The number is real, it comes from the RBI’s balance of paymentsBalance of Payments (BoP)A country's financial ledger recording all money flows in and out. It has a current account (trade, services) and a capital account (FDI, FII, loans). FDI and FII are recorded in the capital account.The RBI data we use comes from the BoP; it's the official scorecard., and it is what every newsroom quotes.
But net FDI is a subtraction. It is not the same as the fresh money foreigners bring in. To understand why the net number fell, you have to look at the taps and the drain separately, not just the water level in the bucket.
What’s the difference between FDI and FII?
They are completely different animals. FDI, foreign direct investment, is money that buys lasting control. A foreign company sets up a factory, buys a 10 percent or larger stake in an Indian firm, and stays. It is patient money. FII, or more precisely FPI (foreign portfolio investment), is money that buys shares or bonds on the open market for a quick return.
It can leave tomorrow. In the balance of payments, the country’s official ledger, they sit in separate columns and behave nothing like each other. Annual FDI moves like a steady march. Annual FII swings from plus $36.1 billion one year to minus $16.8 billion the next. You cannot read one like the other.
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Patient money and hot money
FDI is steady patient money; FII swings wildly from +$$36.1 billion one year to –$$16.8 billion the next.
Net FDI against net foreign portfolio investment · financial years 2000-01 to 2024-25 · RBI balance of payments
US$ million
Net FDI (control, lasting)Net FPI / FII (portfolio, mobile)
Net FPI / FII (portfolio, mobile)$3,564Net FDI (control, lasting)$959
About this chart
Two lines share the same axis: net FDI and net portfolio (FII/FPI) investment. FDI moves like a slow hill, rising and falling gently over decades. Portfolio flows spike and crash. In 2020-21, net FII raced to $$36.1 billion. The very next year it plunged to –$$16.8 billion. FDI barely budged. This chart is the simplest proof that FDI and FII are entirely different kinds of money. FDI builds factories; FII trades stocks. The data come from the RBI's balance of payments and are both net figures, so they are directly comparable.
Why this chart To visually separate the two concepts of foreign money and show why confusing them leads to wrong panic.
How to read it Two lines with the same scale; the volatile one is FII, the stable one is FDI.
Watch out Do not assume a sudden drop in one line means the other also changed.
If FDI ‘collapsed’, why did gross inflows hit a record?
Because the net number is a subtraction, not a reading on the inflow tap. In 2024-25, gross FDI into India reached $80.6 billion, the highest ever recorded. The same year, net FDI was about $1 billion.
So foreigners came in record numbers. The gap between gross and net is the drain: the money that goes back out. And that drain swelled. The year the net figure ‘collapsed’, the inflow tap was running at full pressure. The crisis was not about money coming in; it was about money going out.
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Gross inflows hit a record the year net 'collapsed'
Gross FDI inflows reached an all-time high of $$80.6 billion in FY2024-25, the very year net fell to under $1 billion.
Gross FDI inflows against net FDI, the same year measured two ways · financial years 2000-01 to 2024-25 · RBI balance of payments
US$ million
Gross FDI coming inNet FDI (what the headlines quote)
Gross FDI coming in$80,615Net FDI (what the headlines quote)$959
About this chart
This dual-line chart shows gross FDI inflows and net FDI together. Gross inflows climbed from $$4.0 billion in 2001 to a record $$80.6 billion in 2024-25. Meanwhile, net FDI fell from its peak. The two lines, which once moved together, have parted dramatically since 2019-20. The distance between them is the sum of money flowing out. The chart is the single most important visual for correcting the misreading. Foreigners did not stop coming; they came in larger numbers than ever. The panic was about the wrong number.
Why this chart To reveal the central myth-buster: the inflow tap was wide open even as net collapsed.
How to read it The gross line goes up and to the right; the net line peels away and declines.
Watch out Do not read the falling line as falling inflows; it is the net result of larger outflows.
Where did the missing net FDI go?
Two drains grew rapidly. The first is repatriation. When a foreign-owned company in India makes a profit, it sends some of that money home. When it sells its stake, the exit proceeds leave the country. Together, this repatriation and disinvestment surged from $18.4 billion in 2019-20 to $51.5 billion in 2024-25.
The second drain is outward direct investmentOutward Direct InvestmentMoney Indian companies invest abroad to buy or build businesses. Tata Motors buying Jaguar Land Rover is an example. It counts as an outflow in the FDI account.Indian outward investment roughly doubled in five years, directly reducing net FDI.. Indian firms investing abroad, buying companies, building plants, climbed from $13 billion to $28.2 billion over the same period. Add those two outflows to the net, and you get back close to the gross. The money never vanished; it was just heading the other way.
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What eats the gap: repatriation and Indians investing abroad
In FY2024-25, outflows from repatriation ($$51.5 billion) and outward FDI ($$28.2 billion) consumed almost all the record gross inflow.
The four components of the net FDI figure: gross inflows, repatriation and disinvestment, Indian outward investment, and the net residual · financial years 2000-01 to 2024-25
US$ million
Repatriation (profits/exits leaving)Gross inflows, FDI by India (going abroad), Net FDI (what's left)
Repatriation (profits/exits leaving)$51,486Gross inflows, FDI by India (going abroad), Net FDI (what's left)
About this chart
This chart deconstructs net FDI. It stacks gross inflows at the top, then subtracts repatriation and outward FDI to arrive at net. The two subtractions have grown dramatically. Repatriation rose from $$18.4 billion in FY20 to $$51.5 billion; outward FDI from $$13 billion to $$28.2 billion. In FY2024-25, the two drains together exceeded $79 billion, almost exactly matching the gross inflow. The net that remained was under $1 billion. The visual makes the arithmetic transparent: net FDI didn't disappear; it was paid out.
Why this chart To show the exact components that chipped away the net and demonstrate that the gap is not mysterious.
How to read it Look at the stacked bars or lines: top is gross, then two outflows, then net at the bottom.
Watch out Do not treat repatriation as a sign of distress; it includes normal profit remittances.
Are foreign investors just taking their profits home?
Yes, and that is a sign of a healthy investment, not a crisis. Repatriation includes both profits and the return of capital when a foreign investor sells. The line on the chart has risen from zero in 2001 to over 51 billion dollars today.
That is what happens when a country has a large, mature stock of foreign investment. Profits get earned, and some of them get paid out. India’s FDI stock is larger than it was a decade ago, so repatriation should be larger. Think of it as a dividend cheque, not a flight.
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Foreign investors are taking profits home
Repatriation nearly tripled from $$18.4 billion in FY20 to $$51.5 billion in FY25.
Repatriation and disinvestment by foreign investors, $51.5 billion in 2024-25 · financial years 2000-01 to 2024-25 · RBI balance of payments
US$ million
About this chart
This single-line chart tracks annual repatriation and disinvestment. Twenty years ago, the figure was zero. It has climbed steadily, reflecting the growing stock of foreign investment in India. Older investments mature and start paying dividends or get sold, sending money back. The line's steep rise after 2019-20 is the single largest reason net FDI fell. Think of it as a factory that was built a decade ago finally generating enough cash to send profits back to its parent. That is a sign the investment worked, not that the investor is fleeing.
Why this chart To isolate the largest drain and explain that it is a normal feature of a maturing FDI stock.
How to read it A line climbing from near zero to over $51 billion; focus on the sharp rise in recent years.
Watch out Do not equate repatriation only with disinvestment panic; much of it is profit distribution.
Has India become a capital exporter?
Quietly, yes. The stock of investment Indian firms hold abroad was $124 million in 1990. By the end of 2024, it was about $260 billion.
That is not an annual flow; it is the accumulated value of factories, subsidiaries, and brands Indian companies own around the world. India now exports capital on a scale that would have been unthinkable a generation ago. A two-way capital flow is what maturing economies do.
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India has quietly become a capital exporter
The stock of investment Indian firms hold abroad stands at $$260 billion, up from $$124 million in 1990.
Accumulated stock of Indian-owned direct investment abroad, at book value · 1990 to 2024
US$ million
About this chart
This UNCTAD chart shows India's outward FDI stock over three decades. The line starts flat near zero in 1990, then arcs upward after the 2000s. It crosses $100 billion around 2010 and surpasses $260 billion by 2024. This is the accumulated value of Indian-owned factories, brands, and subsidiaries around the world. It means Indian companies have become net investors abroad. This long-term transformation is a fundamental shift: India is no longer just a destination for foreign capital; it is a source as well. That changes how we must read the FDI numbers.
Why this chart To show the scale and historical arc of India's emergence as a capital exporter.
How to read it A long-run line curving upward; note the acceleration after 2005.
Watch out This is a stock, not an annual flow; stock values accumulate and don't reset each year.
How much has Indian investment abroad grown?
The yearly outflow, the money Indian firms sent abroad each year, roughly doubled in five years. It rose from $13 billion in 2019-20 to $28.2 billion in 2024-25. Every dollar an Indian company spends to buy a firm in London or build a plant in Vietnam counts as an outflow that reduces net FDI. That is not a bad thing; it means Indian businesses are competitive enough to go global. But it means the net FDI headline can fall even while India attracts record inflows, simply because its own companies are also investing abroad.
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And the yearly outflow has doubled
Annual outward FDI by Indian companies rose from $$13 billion in FY20 to $$28.2 billion in FY25.
Annual outward direct investment by Indian entities, which includes overseas subsidiary funding and round-tripping · financial years 2000-01 to 2024-25
US$ million
About this chart
This chart zooms in on the yearly flow, not the stock. The RBI data shows outward direct investment rising from under $1 billion in the early 2000s to $28.17 billion in the latest year. The steep climb in the last five years is what directly ate into net FDI. Every dollar an Indian conglomerate spends to acquire a foreign company counts as an outflow that reduces the net figure. This is not capital flight; it is Indian business going global, a pattern seen earlier in South Korea and China at similar stages of development.
Why this chart To show the recent acceleration of Indian outward investment as a key factor shrinking net FDI.
How to read it Line chart; notice the steep post-2019 rise and label the doubling from FY20 to FY25.
Watch out Do not interpret all outward FDI as new greenfield investment; some may be round-tripping or financial engineering.
Why do portfolio flows look so violent month to month?
Because FII is hot money. The monthly chart is a seismograph. In March 2020, when COVID hit, $14.6 billion left in a single month. Eight months later, in November 2020, $10.9 billion flowed in.
These are not responses to India’s tax policy or election results. They are capital racing in and out on global fear and greed. A bad month does not mean a broken economy; it means a fund manager in New York hit the sell button. The monthly noise is the whole point.
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Hot money, month by month
Monthly net FII swings from an outflow of –$$14.6 billion (March 2020) to an inflow of $$10.9 billion (November 2020) in the same year.
Net monthly foreign portfolio investment · March 2011 to March 2026
US$ million
About this chart
This monthly line chart from RBI shows net portfolio investment since 2011. The line is a jagged sawtooth. March 2020, when COVID hit, recorded a record outflow of $$14.6 billion. By November, as markets rebounded, $$10.9 billion poured back in. No factory opens or closes that fast. This is hot money: buying and selling by global funds that can reverse direction in days. The chart is noisy, and that is its entire point. A bad month does not mean a bad economy; it means fund managers shifted their bets.
Why this chart To illustrate the violent short-term nature of FII, which is completely unlike FDI.
How to read it Look for the extreme spikes; the y-axis will need to handle both large negative and positive values.
Watch out Do not read a single month as a trend; FII is a series of sharp, often temporary, moves.
What do annual FII swings tell us?
Even the yearly totals are wild. In 2020-21, net FII was $36.1 billion. In 2021-22, it flipped to a negative $16.8 billion. Next year, 2023-24, it bounced back to $44.1 billion. If you only look at one year, you can tell any story you want.
The pattern is that there is no pattern. Portfolio investors are not making a long-term bet on India’s institutions; they are trading global conditions. The annual figures confirm that no single year’s number should be read as a verdict.
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Three wild years in a row
Annual net FII swung from $$36.1 billion (FY21) to –$$16.8 billion (FY22) to $$44.1 billion (FY24).
Net annual foreign portfolio investment, most recent years · RBI balance of payments
US$ million
About this chart
This bar chart simplifies the volatility to annual totals. Even when you smooth out the months, the numbers lurch. A $53 billion swing in two years, followed by a $60 billion reversal, is extreme. This is not the steady behavior of patient money. It reflects global liquidity waves, risk appetite, and interest rate cycles. The bars show that no single year's FII number should be read as a referendum on India's policies. The money comes and goes on global tides.
Why this chart To show that even annual aggregation does not dampen the violent swings of portfolio flows.
How to read it Three bars, one per fiscal year, alternating between positive and negative; heights in billions.
Watch out Don't assume the most recent year's number is a new normal; FII does not have a normal.
Why did equity leave while debt poured in?
Lumping all FII together hides the real story. In 2024-25, foreign portfolio investors sold net equity worth 1,27,041 crore rupees while buying net debt worth 1,43,162 crore rupees. The two arms moved in opposite directions. Equity investors, chasing growth and taking risk, pulled back. Debt investors, seeking stable returns, piled in. This split became dramatic because of a structural event, not sentiment.
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Equity walked out while debt poured in
In FY2024-25, net equity FPI was –₹1,27,041 crore while net debt FPI was +₹1,43,162 crore.
Net annual foreign portfolio flows into equity against debt, in rupees because the dollar series carries a one-month source glitch · financial years 1992-93 to 2025-26
INR crore
EquityDebt
About this chart
This dual-line chart uses NSDL depository data in rupees to split portfolio flows into equity and debt. The two lines move in opposite directions in the most recent year. Equity, the riskier bet, saw a heavy exodus. Debt, the safer asset, attracted strong inflows. This split is invisible in the headline FII number. It tells us that the sell-off was not a blanket rejection of India; it was a reallocation from stocks to bonds. The drivers were different: equity flows respond to growth fears and currency swings, while debt flows responded to a structural index inclusion.
Why this chart To reveal that 'FII outflow' often masks a more nuanced story of money moving between asset classes.
How to read it Two lines; one (equity) falling into negative territory, the other (debt) rising sharply.
Watch out These are NSDL depository transaction figures in rupees; do not directly compare to RBI BoP dollar figures.
What was the bond-index moment?
In 2024-25, the Fully Accessible RouteFully Accessible Route (FAR)A special category of Indian government bonds where foreign investors face no limits on how much they can buy. It was created partly to get Indian bonds into global bond indices.Most of the debt inflow in 2024-25 came through FAR, showing it was index-driven., a category of government bonds with no foreign investment limits, saw an inflow of 80,691 crore rupees. That single route accounted for more than half of all net debt FPI. The reason was not sudden love for India; it was that global bond indices, like the JP Morgan emerging-market index, had decided to include Indian government bonds. Passive funds that track those indices had to buy. The inflow was mechanical, scripted, and largely one-off. It shows how much portfolio money is driven by global plumbing, not local conviction.
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The bond-index moment
Debt inflows via the Fully Accessible Route surged to ₹80,691 crore in FY2024-25, a one-off structural event.
Net annual foreign portfolio flows into Fully Accessible Route government bonds, the securities global bond indices buy · financial years to 2025-26
INR crore
About this chart
This line chart shows net FPI debt under the FAR route. For years, the line was flat near zero. Then, in FY2024-25, it shot up to ₹80,691 crore. That is not because foreign investors suddenly fell in love with Indian bonds; it is because global bond indices included Indian government securities, and the FAR was the channel. Passive funds that track those indices had to buy. This inflow was mechanical and likely non-recurring. It explains why debt inflows were so strong even as equity investors fled.
Why this chart To show that a large part of recent debt FPI was scripted by index inclusion, not sentiment.
How to read it A line that stays near zero for most of the chart, then spikes dramatically in the latest year.
Watch out Do not expect this exact level of FAR inflow to repeat every year; it was a one-time adjustment by index-trackers.
Does the US dollar really drive FII out of India?
The link is the strongest in the data. When the US dollar strengthens against emerging-market currencies, FII equity flows tend to leave. The correlation is minus 0.37. It is not a law, but it is a consistent tilt. A rising dollar makes Indian rupee assets less attractive to a global investor.
The dollar index against EM currencies has moved from 100 in 2006 to 128.63 recently, and many outflow months line up with those surges. Washington, not Delhi, is often the trigger.
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The real trigger sits in Washington
The US dollar index against EM currencies correlates at –0.37 with monthly FII equity flows, the strongest link.
The US dollar against emerging-market currencies, indexed to January 2006 = 100 · to June 2026
index (Jan 2006 = 100)
About this chart
This chart from the Fed shows the dollar’s value against a basket of emerging-market currencies. When the line rises, the dollar strengthens, making rupee assets less attractive. The visual often shows a rise in the dollar index during months when FII equity outflows accelerate. The statistical correlation is –0.37, meaning the relationship is consistent over many months. It is not a perfect predictor, some dollar surges coincide with smaller outflows, but it is the most powerful global variable in the dataset. When the dollar strengthens, hot money tends to leave India.
Why this chart To establish the dollar as the most important external driver of FII flows.
How to read it A line chart of the index; look for periods of sharp rise that coincide with known outflow months.
Watch out Correlation does not mean the dollar alone caused each outflow; other factors are always at play.
Do US interest rates pull the strings?
Higher US interest rates make safe American bonds pay more. When the US 10-year Treasury yield rises or the Federal Reserve hikes its overnight rate, the pull of safe-haven assets grows. The correlation between FII equity flows and changes in the 10-year yield is minus 0.12, and with the Fed funds rate level it is minus 0.11. These are weaker links than the dollar, but they all point the same way: when the US tightens, money tends to leave emerging markets. The effect is a background hum, not a siren.
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The US rate cycle pulls the strings
Higher US 10-year yields and Fed funds rates correlate with FII outflows, though weakly (around –0.12).
US 10-year Treasury yield and the federal funds rate, monthly averages · January 2010 to June 2026
percent
US 10-year yieldUS Fed funds rate
About this chart
Two lines track US interest rates: the 10-year Treasury yield and the Federal Reserve’s overnight rate. Both rose sharply in recent years as the Fed fought inflation. When US rates go up, global investors can earn more by parking money in safe US bonds, reducing the appeal of Indian stocks. The correlation numbers are modest: –0.12 for the yield and –0.11 for the fed funds rate. That means the link is there but it is a background factor, not a daily trigger. Rate cycles set the environment in which hot money moves, but they don’t dictate every gyration.
Why this chart To show the interest-rate channel that subtly pulls capital away from emerging markets.
How to read it Two lines with the same percent axis; both trend upward in recent years, with the Fed funds rate lagging the yield.
Watch out Do not assume a rate hike causes an immediate outflow; the correlation is weak and indirect.
Does global fear sell Indian stocks?
The VIXVIX (Volatility Index)A real-time market index that represents the market's expectation of 30-day forward-looking volatility. Often called the 'fear gauge'. When it spikes, global investors flee risky assets.VIX movements correlate with FII outflows, showing hot money reacts to fear., often called the fear index, measures expected volatility in US stocks. When it spikes, the world gets scared, and money flees risk. The correlation with monthly FII equity flows is minus 0.33 for the VIX and minus 0.34 for the EM-focused volatility index. During the 2020 COVID crash, the VIX shot to its highest levels and FII exited at record speed. Fear is contagious, and Indian markets catch it.
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When the world gets scared, India gets sold
The VIX (global fear index) and EM-VIX both spike during crisis months when FII flees; correlation is about –0.33.
The VIX and the emerging-market volatility index, monthly averages · 2010 to June 2026
index
Global volatility (VIX)Emerging-market volatility
About this chart
Two volatility indices, the VIX and the EM-VIX, measure expected market turmoil. When they spike, it signals panic. The chart shows that during the 2020 COVID crash, both indices shot to record highs just as India recorded its worst monthly FII outflow. The correlation with FII equity flows is –0.33 for the VIX and –0.34 for the EM-VIX. Fear is a powerful driver: when global investors get scared, they sell what they perceive as risky, and Indian equities fall into that bucket. The chart makes that risk-off behavior visible.
Why this chart To visually connect spikes in global fear with episodes of FII selling in India.
How to read it Two lines (VIX and EM-VIX) often move together; spikes correspond to shaded outflow months.
Watch out The VIX is a US-centric measure; EM-VIX is more specific to emerging markets but both are imperfect.
What actually moves FII money the most?
When you rank the global forces by their statistical association with FII equity flows, the US dollar against EM currencies comes first at minus 0.37, followed by EM volatility at minus 0.34, the VIX at minus 0.33, the US 10-year yield at minus 0.12, and the Fed funds rate at minus 0.11. All pull in the same direction, stronger dollar, higher fear, higher US rates all correlate with outflows. But these are moderate numbers, not iron laws. Global financial conditions tilt the river, but they do not fully determine the current. A lot of month-to-month noise remains unexplained.
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What actually moves FII money
The dollar is the strongest pull (–0.37), followed by EM volatility (–0.34), VIX (–0.33), US yield (–0.12), and Fed rate (–0.11).
Pearson correlation between monthly net FII equity flows and four global variables, on month-over-month changes except the Fed funds level · 184 months · Indica calculation from FRED and NSDL
correlation with monthly FII equity
About this chart
This horizontal bar chart ranks the correlation of each global factor with monthly FII equity flows. All bars point left (negative), meaning each factor is associated with outflows when it strengthens. The longest bar is the dollar at –0.37, then EM volatility at –0.34, then the VIX, then the yield and the Fed rate. The differences are not huge, but the pattern is unanimous: global tightening and fear tilt the odds in favor of outflows. The chart is clear: Delhi politics is not the main character; the global weather is.
Why this chart To summarize the relative pulling power of global conditions on FII equity flows.
How to read it Bars extending left from a zero line; longer bars mean stronger negative correlation.
Watch out These are correlations, not causation; they measure association, not what caused each monthly move.
Where does FDI ‘come from’?
The top sources on a cumulative basis are tiny tax-treaty hubs. Mauritius accounts for $180 billion, about 24.7 percent of all FDI equity since 2000. Singapore is right behind at $175 billion, another 24 percent. The United States, the actual economic superpower, is a distant third at $70.7 billion, just 9.7 percent. Money often routes through Mauritius or Singapore to benefit from tax treaties, so the ‘source country’ on paper is not the true origin. This is a routing story, not a story about island nations being the world’s great investors.
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FDI 'comes from' tiny tax-treaty hubs
Mauritius ($$180 billion, 24.7%) and Singapore ($$175 billion, 24%) account for nearly half of cumulative FDI equity.
Cumulative FDI equity inflows by the country the money was routed from, not its ultimate owner · April 2000 to March 2025 · DPIIT via IndiaDataHub
US$ million (cumulative)
About this chart
This DPIIT bar chart shows the source of cumulative FDI equity since 2000. Mauritius and Singapore tower over every other country. The United States, at $$70.7 billion (9.7%), is a distant third. These small jurisdictions are not the ultimate origin of the money; they are treaty-routing hubs. Investors often channel funds through them to benefit from double-taxation avoidance agreements. So the chart is a map of legal structures, not a map of where the beneficial owners actually live. It’s a reminder that the headline source of FDI can be a financial address, not a home country.
Why this chart To reveal the tax-treaty routing that distorts the stated origin of direct investment into India.
How to read it Horizontal bars sorted by share; Mauritius and Singapore dominate, US is smaller.
Watch out This is cumulative since 2000 and equity only; do not read it as the current year's flow or the true beneficial ownership.
Who really owns India’s portfolio investments?
When you look at portfolio holdings, the tax-haven pattern nearly vanishes. According to NSDL custody data for May 2026, US-based investors hold 30.8 lakh crore rupees of Indian stocks and bonds, 41.2 percent of all foreign portfolio assets. Mauritius, which dominates the FDI source list, holds just 3.45 lakh crore rupees, a 4.6 percent share. Portfolio money, which is less reliant on tax treaties than direct investments, reveals its true face: it is overwhelmingly American, European, and Singaporean institutional money.
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But portfolio money is real American money
US-based investors hold 41.2% of all FPI assets in India (₹30.8 lakh crore); Mauritius holds only 4.6% (₹3.45 lakh crore).
Foreign portfolio assets under custody by country, a stock of holdings rather than a flow · latest NSDL month
INR crore
About this chart
This NSDL custody bar chart flips the lens. Now, the US dominates, with total assets under custody of ₹30.8 lakh crore. Luxembourg, Ireland, and the UK follow. Mauritius, which topped the FDI chart, shrinks to just ₹3.45 lakh crore, a 4.6 percent share. Portfolio investment, which is largely publicly traded securities, has little benefit from tax treaties, so it reveals its true national origin. The chart confirms that much of the real money behind India’s markets is American, with European and Japanese funds also significant. The tax-haven pattern of FDI is almost entirely absent.
Why this chart To contrast the true geographic origin of portfolio holdings with the tax-routing pattern of FDI.
How to read it Horizontal bars sorted by total assets; US is far and away the largest, Mauritius is small.
Watch out This is a stock snapshot from May 2026; it reflects holdings, not recent flows.
Which sectors get the foreign direct investment?
The biggest cumulative chunk is services, including finance, banking, and insurance, at $119 billion, 16.3 percent of the total. Computer software and hardware is a close second at $111 billion, 15.2 percent. Together, these two knowledge-economy sectors make up nearly a third of all FDI. Trading, telecom, automobiles, and infrastructure construction trail behind. The data tells an honest story: foreign money came to India for its services and digital economy, not primarily for factories. The ‘Make in India’ manufacturing push accounts for a noticeably smaller share.
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And it goes into services, not factories
Services (₹$119 billion, 16.3%) and computer software (₹$111 billion, 15.2%) are the largest cumulative FDI sectors.
Cumulative FDI equity inflows by sector · April 2000 to March 2025 · DPIIT via IndiaDataHub
US$ million (cumulative)
About this chart
This DPIIT bar chart shows where cumulative FDI equity has landed by sector. Services, a broad category including finance and banking, and computer software together account for nearly a third. Trading, telecom, and automobiles are next, with manufacturing sectors like drugs and chemicals further down. The picture is clear: foreign direct investors came for India's digital, financial, and services growth, not primarily to build factories. The 'Make in India' vision has attracted some capital, but the money has overwhelmingly backed the knowledge economy. This sectoral skew is a structural feature, not a recent twist.
Why this chart To show the sectoral destination of FDI and challenge the manufacturing narrative.
How to read it Horizontal bars; services and software are the tallest, far ahead of traditional manufacturing sectors.
Watch out Sector categories are broad; 'services' includes many sub-sectors that DPIIT does not split here.
Is India’s share of world FDI really shrinking?
India’s slice of the global FDI pie has never been large. It climbed from 0.12 percent in 1990 to around 2 percent in recent years. In 2024, it stood at 1.83 percent. The recent dip is partly a global story: total world FDI itself contracted in some years, so India’s share can wobble. The chart shows that India has hovered in this 1 to 3 percent band for decades. It is a small, steady piece of a big and volatile pie.
Chart
India is a small slice of world FDI
India's share of global FDI inflows was 1.83% in 2024, never having exceeded 3% historically.
India's inward FDI as a share of world inward FDI · 1990 to 2024
percent
About this chart
This UNCTAD line chart shows India's percentage of world FDI inflows since 1990. The line crawls from near zero to around 2 percent. It dips during global slowdowns, the 2008 crisis, the pandemic, and rises in boom years. But it never breaks out. That means India's absolute FDI numbers move largely with the global tide. When world FDI shrinks, India's drops, even if no policy has changed. A low percentage doesn't mean the money is insignificant, but it does mean India is a small part of a big picture. The recent dip is partly a global story.
Why this chart To right-size India's FDI inflows in the context of global capital flows.
How to read it A horizontal line that oscillates between 0% and 3%; focus on its stability, not its wiggles.
Watch out Share can fall even if India's absolute inflows rise, if the rest of the world grows faster.
How does India compare with peer economies?
In 2024, India attracted $27.6 billion in FDI inflows. The United States drew $279 billion, ten times as much. Singapore, a city-state, pulled in $143 billion. China got $116 billion, and Brazil $59.2 billion. Even Mexico, at $36.9 billion, was ahead.
India’s number is not large for its economic size, and a single year’s figure must be read with caution, one big deal can skew it. But the ranking over many years shows India still punches below its weight in attracting the patient money that builds lasting assets.
Chart
Still well behind the leaders
In 2024, India's FDI inflow was $$27.6 billion, far below the US ($$279 billion), Singapore, China, and Brazil.
Inward FDI received in the latest year, India against the largest recipients · one year's flow, which is volatile
US$ million
About this chart
This bar chart uses UNCTAD data to rank selected economies by FDI inflow in 2024. The US towers at $278.8 billion. Singapore, a city-state, drew $143.4 billion, and China $116.2 billion. Brazil attracted $59.2 billion, and Mexico $36.9 billion. India, at $27.6 billion, is nearer the bottom of this peer set. For an economy of its size, India's FDI numbers are modest. A single year can be skewed by one big deal, but the multi-year pattern is that India attracts less than one might expect. The chart is a reality check against the idea that India is a top destination for long-term investment.
Why this chart To benchmark India's FDI inflows against key emerging and developed economies and highlight the gap.
How to read it Horizontal bars in descending order; US and Singapore far outstrip the rest; India is near the bottom.
Watch out A single year's figure can be distorted; compare multi-year trends for a fuller picture.
Tell me what this means, bro
Okay, but what does this actually mean, macha?
Picture this: your chai shop is doing great. The next year, you count the cash left after paying for milk and sugar, and it’s less. You panic, but the real reason is you’ve started giving your brother money to open his own tapri, and you paid back a loan with interest. That’s exactly what happened with India’s foreign investment numbers. The money coming in is still at a record high. It’s just that more of it is now going back out as profits, or as Indian companies buying firms abroad. So the headline ‘foreigners are leaving’ is backward. The money coming in is real; what’s new is how much is also going out. And the hot money that comes and goes? That’s driven more by what the US Federal Reserve does than by anything in Delhi.
India didn’t lose its foreign investor appeal; it gained a two-way street where money comes in, grows, and partly returns, just like a mature economy.॥
Plain English concepts
FDI (Foreign Direct Investment)
Money a foreign entity invests to gain lasting control—typically a 10% stake or more—in an Indian business. Think of it as building a factory or buying a company. It's 'patient' money that stays for years.
The entire panic is about FDI's net figure; understanding the difference from portfolio flows is essential.
Money foreign investors put into Indian shares, bonds, or other financial assets on the open market without seeking control. It's 'hot' money that can be sold and pulled out overnight.
FII drives the monthly volatility; it behaves completely differently from FDI.
Gross vs Net FDI
Gross FDI is the total money coming in. Net FDI is what remains after subtracting money that leaves (repatriation, outward investment). A fall in net does not mean gross fell.
The central myth-buster of the whole page.
Repatriation
Profits, dividends, or the original investment sent back to the foreign investor's home country. It's a normal part of doing business, not a signal of doom, and rises as past investments mature.
Repatriation is the biggest reason net FDI fell, and it's partly a sign of success.
Outward Direct Investment
Money Indian companies invest abroad to buy or build businesses. Tata Motors buying Jaguar Land Rover is an example. It counts as an outflow in the FDI account.
Indian outward investment roughly doubled in five years, directly reducing net FDI.
Balance of Payments (BoP)
A country's financial ledger recording all money flows in and out. It has a current account (trade, services) and a capital account (FDI, FII, loans). FDI and FII are recorded in the capital account.
The RBI data we use comes from the BoP; it's the official scorecard.
Fully Accessible Route (FAR)
A special category of Indian government bonds where foreign investors face no limits on how much they can buy. It was created partly to get Indian bonds into global bond indices.
Most of the debt inflow in 2024-25 came through FAR, showing it was index-driven.
Assets Under Custody (AUC)
The total value of securities that a depository (like NSDL) holds on behalf of foreign investors. It's a stock measure—a snapshot of what they own, not what they bought that year.
The FPI-by-country chart uses AUC to show who holds Indian stocks and bonds.
VIX (Volatility Index)
A real-time market index that represents the market's expectation of 30-day forward-looking volatility. Often called the 'fear gauge'. When it spikes, global investors flee risky assets.
VIX movements correlate with FII outflows, showing hot money reacts to fear.
USD-EM Index
A Federal Reserve index measuring the value of the US dollar against a basket of emerging-market currencies. When it rises, the dollar is strengthening, making EM assets less attractive.
The strongest correlation with FII equity flows; a rising dollar pulls money out.
The data behind this article
Built from 23 data series across 6 sources, with data through 2026.
CBOE Emerging-Markets ETF Volatility Indexdata file ↗FRED · 2011–2026monthly average of daily/native observations
CBOE Volatility Index (VIX)data file ↗FRED · 2010–2026monthly average of daily/native observations
Cumulative FDI equity inflow by sector (DPIIT)data file ↗IndiaDataHubServices and software dominate; India's FDI is services-heavy, not factory-heavy
Cumulative FDI equity inflow by source country (DPIIT)data file ↗IndiaDataHubMauritius/Singapore/Netherlands lead via treaty routing, not as ultimate origin
FDI by India (outward direct investment) (annual, US$ mn)data file ↗RBI · 2001–2025
FDI inflows: India vs peers (2024)data file ↗Unctadcalendar-year inward FDI flow; World excluded
FPI assets under custody by source country (NSDL, May 2026)data file ↗NSDLAssets under custody = stock of FPI holdings, not flows. Debt-FAR/MF/AIF included w.e.f. Aug 2024.
Gross FDI inflows to India (annual, US$ mn)data file ↗RBI · 2001–2025
India's share of world FDI inflowsdata file ↗Unctad · 1990–2024
Key FDI/FII reference points (RBI)data file ↗RBIIntermediate-year reference points the narrative depends on: the FY2019-20 net-FDI peak (~$43bn, the 'cliff' baseline), the FY21/FY22/FY24 portfolio swings (+36/-17/+44 $bn), and the March-2020/November-2020 monthly extremes.
Net foreign direct investment (annual, US$ mn)data file ↗RBI · 2001–2025
Net FPI debt under Fully Accessible Route (FAR) (annual, ₹ cr)data file ↗NSDL · 1993–2026FY2009-10 & FY2014-15 corrected to monthly sums; see reconciliation audit
Net FPI investment in debt (annual, ₹ cr)data file ↗NSDL · 1993–2026FY2009-10 & FY2014-15 corrected to monthly sums; see reconciliation audit
Net FPI investment in equity (annual, ₹ cr)data file ↗NSDL · 1993–2026FY2009-10 & FY2014-15 corrected to monthly sums; see reconciliation audit
Outward FDI stock of India (UNCTAD)data file ↗Unctad · 1990–2024differs from RBI fiscal-year net
Recent FPI net investment by instrument (NSDL)data file ↗NSDL2024-25 is the bond-index year: equity net about -1.27 lakh crore, debt net about +1.43 lakh crore (of which about +80,691 crore via the Fully Accessible Route).
US 10-year Treasury yielddata file ↗FRED · 2010–2026monthly average of daily/native observations
US dollar index vs emerging-market currencies (nominal)data file ↗FRED · 2006–2026monthly average of daily/native observations
US federal funds ratedata file ↗FRED · 2010–2026monthly average of daily/native observations
What moves FII money: correlation of monthly equity flows with global conditionsdata file ↗DerivedPearson correlation of NSDL monthly net FPI equity flow (USD) with each global factor, 2011-2026; level series use month-over-month change (flows respond to changes, not levels).
Bhuvanesh. “Is foreign money really fleeing India? What FDI and FII numbers actually mean.” This Indian Life, October 2026. https://thisindianlife.today/articles/foreign-investment/
BibTeX
@misc{tilife-foreigninvestment,
author = {Bhuvanesh},
title = {Is foreign money really fleeing India? What FDI and FII numbers actually mean.},
year = {2026},
publisher = {This Indian Life},
url = {https://thisindianlife.today/articles/foreign-investment/}
}
APA
Bhuvanesh. (2026). Is foreign money really fleeing India? What FDI and FII numbers actually mean. This Indian Life. https://thisindianlife.today/articles/foreign-investment/