The concerns over India’s financial account refuses to ebb away. Amid net portfolio outflows of $19 billion from Indian equities in 2025, the country continues to witness net outflows of foreign direct investment (FDI) as well.
On a net basis, FDI inflows remained negative in November for the third consecutive month, mainly due to high repatriation, the Reserve Bank of India’s (RBI) revealed in its January bulletin.
Also, the registrations and net inflows of external commercial borrowings (ECBs) moderated during April-November 2025 compared to the same period a year ago, reflecting a broader slowdown in offshore fundraising activity.
The RBI bulletin revealed that net FDI outflow of $446 million in November last year after $1.7 billion outflow in October and $1.6 billion in September last year.
However, compared to net FDI inflows of less than $1 billion in 2024-25, the first eight months of 2025-26 has seen net FDI inflows of $5.6 billion. On a gross basis, FDI inflows in November, 2025 stood at $6.4 billion, slightly lower than $6.5 billion the previous month and $7 billion in September last year.
The registrations of ECBs moderated to $23.1 billion during April-November 2025, from $33.8 billion in the corresponding period a year ago, data from RBI show. Around 43% of the ECB funds was mobilised for capital expenditure purposes.
Resilience Amid Tensions
At a time when global geopolitical tensions escalate, India’s economy provides ground for optimism and the country will remain the fastest growing major economy in the world, the bulletin said.
India has made significant efforts to diversify and strengthen its exports, aiming to mitigate external sector shocks, the bulletin notes.
In the current financial year, the growth in private final consumption expenditure (PFCE), the mainstay of aggregate demand, remained broadly steady and the first advance estimate pegs it at 56.3% of GDP compared with 56.5% in FY25.
The growth in PFCE growth was underpinned by sustained rural demand and a gradual recovery in urban demand, part of which may be attributed to the rationalisation of the goods and services tax, the bulletin uderlines.
The overall demand conditions remained upbeat in December as indicators of rural demand regained momentum with retail automobile sales recording broad-based growth across categories.
An increase in automobile sales was driven by enhanced affordability following GST rate cuts, year-end promotional offers, and increased demand ahead of expected price revisions in January.
Similarly, retail sales of two-wheelers and tractors posted strong growth supported by increase in minimum support prices for rabi crops and GST rationalisation, an article published in the January bulletin said.
Foreign exchange market
The rupee depreciated against the US dollar in December, pressured by foreign portfolio outflows and uncertainty surrounding the India-US trade deal. In January (up to 19th), the INR depreciated by 1.2% over its end-December level. India’s foreign exchange reserves remain comfortable, providing cover for more than 11 months of goods imports and a cover for around 92% of the external debt outstanding.