FDI inflows hit a 35-month high in April, says RBI Bulletin. 

On June 6^th 2025, the Reserve Bank of India (RBI) released its Bulletin for June 2025.  The bulletin includes the bimonthly monetary policy statement (June 6, 2025), two speeches, five articles, and current statistics. In this article, we will see about Foreign Direct Investment Inflows and outflows in April as per RBI Bulletin

Foreign  Direct Investment (Inflow)

The RBI Bulletin reports that India received a net Foreign Direct Investment (FDI) of $3.95 billion in April, the highest in 35 months and more than double the amount from the previous year. This surge in foreign investments followed a period of net outflows in the previous months.

In April, Gross FDI inflows reached $8.80 billion, the highest in 39 months, with a significant portion allocated to investments in manufacturing and business services. This figure surpasses the $5.9 billion recorded in March 2025 and the $7.2 billion in April 2024.

FDI inflows to manufacturing and business services made up nearly half of the gross total this month.

Telecommunication, services, and capital goods were the top sectors receiving investments.

The debt segment, which had seen outflows in the previous month, had a pause in withdrawals in May.

Non-Resident Indian deposits increased to $165.43 billion in April, up from $164.68 billion the previous year.

The rise in forex reserves strengthened the rupee and indicated a strong external balance position, capable of financing over 11 months of the country’s exports.

Despite facing challenges in the 2024-25 fiscal year, India maintained its appeal as an investment destination, with FDI inflows rising by 14% to $81.04 billion.

In May 2025, foreign portfolio investment (FPI) experienced a notable surge, recording net inflows of $1.7 billion, mainly driven by the equity sector.

This marked the third consecutive month of growth for equities, supported by favorable events like the India-Pakistan ceasefire, US-China trade agreement, and robust corporate earnings in the fourth quarter of the fiscal year 2024-25.

These positive developments enhanced investor trust and prompted a reallocation of portfolios towards Indian assets.

Outbound Flows

While outbound flows persisted as foreign investors repatriated funds, the amount was notably lower compared to the previous year.  The increase in net outward FDI was coupled with slower repatriation.  

In 2024-25, repatriation and disinvestment by foreigners increased by 16% to $51.49 billion.

Conversely, Indian companies saw a substantial increase in FDI in April, reaching $3.19 billion, marking a 16% rise from the previous year.

Key sectors for outward FDI included electricity, gas, water, financial, insurance, and business services, with major destinations being Singapore, Mauritius, and Germany.

The World Bank recently highlighted the decline in FDI inflows to developing countries, underscoring the importance of reversing this trend for job creation, sustained growth, and broader development objectives.

Despite challenges, India’s FDI figures for April suggest a positive trajectory, demonstrating the country’s resilience as an investment hub.

Spending on Foreign Studies

The most recent data from the Reserve Bank of India shows a consistent drop in spending on foreign education by Indian residents.

Although total remittances sent abroad under the RBI’s Liberalised Remittance Scheme (LRS) increased by 9% year-on-year in April to $2.48 billion, expenses related to travel saw a significant 11% growth to $1.27 billion.

Travel-related remittances typically make up for more than half of total LRS remittances.

However, remittances for foreign education, a substantial category of overseas spending, saw a steep 21% decrease in April, amounting to $164 million.

This downward trend continued in the first four months of 2025, with spending under the LRS for foreign education decreasing by 21% to $874 million.

Conclusion

It is important to note that the RBI allows Indian residents to remit up to $250,000 per financial year through the LRS for various purposes including travel, education, medical treatment, and foreign investments.

The data shows a decrease in the amount of money sent overseas for educational purposes under the LRS. This decline could be attributed to uncertainties surrounding the new U.S. visa procedures.

The reduced spending on education abroad indicates a reevaluation of preferences among Indians, mirroring changes in global education and travel patterns.

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