FDI CRASH LANDING: India’s Net Inflows Nearly Wiped Out in May

  • India’s net foreign direct investment (FDI) inflows collapsed by a stunning 98.2% year-on-year in May, falling to just $40 million from $2.2 billion a year ago—compared to $3.9 billion in April.

  • Gross FDI inflows also slid 11% to $7.2 billion in May, down from $8.1 billion a year earlier and $8.7 billion in April, signaling not only a massive net fall but also a cooling in headline FDI enthusiasm.

  • The FDI washout is attributed to a surge in repatriation and divestment by foreign investors, which hit $5 billion in May—up over 20% from last year, as overseas investors pocketed profits or reversed bets in India.

  • Outward FDI by Indian companies also jumped to $2.1 billion in May, up 18% from last year, showing more Indian firms are eyeing global expansion over local reinvestment.

  • The combined effect: foreign money coming into India is being almost entirely offset by money leaving, spelling short-term pain for sectors dependent on foreign capital.

  • Despite the net carnage, gross FDI remains robust, with Singapore, Mauritius, the UAE, and the US together plugging over 75% of May’s total inflow, and manufacturing, financial, and IT services as top magnets.

  • Experts warn the net FDI plunge could squeeze liquidity, slow new projects, and raises red flags about investor confidence, even as the government and RBI portray higher repatriation as proof of market maturity and investment flexibility.

  • Crucially, for the first two months of FY26, cumulative net FDI has been flat at $3.9 billion, barely budging from last year’s $4.0 billion—prompting calls for a rethink on how to woo, and keep, serious foreign capital.

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