India’s net foreign direct investment remained negative for the third consecutive month in October 2025, with outflows exceeding inflows by $1.5 billion, an analysis of latest data from the Reserve Bank of India shows. Separately, the RBI pointed out that uncertainty around the India-U.S. trade deal was a major reason why foreign portfolio investors were also taking more money out of the country than putting in it.  

The main drivers of the negative net FDI figure are a combination of a year-on-year fall in direct investments entering the country, and an increase in outward direct investments made by Indian companies. Direct investments are typically made in assets and are viewed as growth-generating, as opposed to portfolio investments, which are generally done in equity and debt for expected returns.

Notably, the most recent RBI data shows that outflows have exceeded inflows in terms of both direct as well as portfolio investments.

Direct outflows  

The data shows that gross direct investment into India, which is the total amount of investments entering the country, stood at $6.5 billion in October 2025, down 8.8% over its level in October 2024, and down 6.6% over its level in September 2025.

Outward investments made by Indian companies increased to about $3.1 billion in October 2025, up 63.1% over its level in October 2024. However, this was nearly 24% lower than the outward FDI seen in September 2025.

 “Net FDI was negative in October, mainly due to high repatriation and outward FDI,” the RBI noted in its monthly bulletin. “The key destinations for outward FDI were Singapore, followed by the US and the UAE, together accounting for more than half of total outward FDI.” 

The report further said that around 90% of the outward FDI was in financial, insurance, and business services, followed by wholesale, retail trade and manufacturing.

Repatriation and disinvestment by foreign companies operating in India, the other component of outward direct flows, stood at about $5 billion in October 2025. This was 7.% lower than in October 2024, but 8.3% higher than in September 2025.

As a result, net FDI stood at -$1.5 billion in October, as compared to -$129 million in October last year.

Trade deal uncertainty to blame 

The RBI noted that foreign portfolio investments turned negative in December, up to December 18, which means that investors took out more money than they put in. Net foreign portfolio investments stood at -$2.3 billion in December 2025 up to December 18. 

“FPI flows turned negative in December following inflows in the previous two months,” the RBI noted. “The uncertainty surrounding the India-US trade deal and investors’ caution around high domestic valuations kept net FPI flows to India muted in recent months.” 

The U.S. has imposed 50% tariffs on imports from India, and while both sides say they are making headway in finalising a tariff-related first tranche of a trade deal, so far no announcement of the completion of such a deal has been forthcoming.    

While the gross Foreign Direct Investment (FDI) into India grew to a four-year high in June 2025, the net amount contracted more than 50% owing to faster growth in repatriations by foreign companies in India, and outward investments by Indian companies, according to data released by the Reserve Bank of India (RBI). 

The data, released as part of the RBI’s monthly bulletin, shows that this trend holds true on a quarterly basis as well. Gross investments in the June 2025 quarter grew 10.5%, but were outpaced by the growth in outward FDI by Indian companies, leading to a contraction in net FDI.

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Gross inflows into India, which measures the total amount entering the country, stood at $9.3 billion in June 2025, up nearly 22% as compared to $7.6 billion in June 2024. and $7.2 billion in May 2025. 

“Gross inward FDI reached a four-year high in June,” the RBI noted in its report. “Even so, net FDI inflows remained muted due to an increase in both repatriation of FDI and outward FDI.”

Repatriation or disinvestment, which is the amount of money foreign companies operating in India are sending outside, increased by 40.7% in June 2025 to $5.7 billion. This was even higher than the $5 billion seen in May 2025. 

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Outward FDI by Indian companies grew even faster, by more than 88%, to $2.5 billion in June 2025. As a result, net FDI, which is gross FDI minus repatriation and outward FDI, stood at $1.1 billion in June 2025, about 52% lower than its level in June last year.

On a quarterly basis, gross FDI into India increased by 10.5% in the June 2025 quarter to $25 billion, but net FDI contracted by 21% to $4.9 billion. This was because outward FDI grew by more than 79% to $7.9 billion and repatriation grew by 1.8% to $12.4 billion during this period.  

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The Congress on Monday (July 28, 2025) claimed that the net foreign direct investment has fallen steeply while domestic investors are gripped by “fear and uncertainty”, as it asked the government to support incomes, end its “crony capitalist and tax terrorism” policies, fix the GST, and protect Indian industries from Chinese dumping.

The opposition party’s assertion came after Finance Minister Nirmala Sitharaman’s reported remarks that India’s private sector investment has not kept pace with the growing public expenditure.

Also Read: Why has net FDI inflow plummeted?

In a post on X, Congress general secretary in-charge communications Jairam Ramesh said, “The Finance Minister has finally acknowledged what the INC had been saying for a long time: that private investment continues to be sluggish and is not growing at the pace desired and also expected.”

“This is even after the significant corporate tax cuts of September 2019, undertaken just before the Howdy Modi event that was held in Houston in support of President Trump’s re-election,” Mr. Ramesh said.

He further said that net FDI has fallen steeply while domestic investors are gripped by “fear and uncertainty” – thanks in large measure to “tax terrorism and policies that only favour a couple of business groups”.

“The growth of mass markets for consumption goods is being hampered by a decade-long stagnant wages crisis and a flawed GST, which awaits fundamental reform,” Mr. Ramesh argued.

“Finally, the “dumping” of cheap imports from China – which is taking place despite the loss of Indian territory in Ladakh – has also led to the closure of domestic manufacturing units, foreclosing the possibility of new investments,” he said.

“Acknowledgment is the first step. Now comes the hard part – the government needs to take action to support incomes, put an end to its crony capitalist and tax terrorism policies, fix the GST, and protect our industries from Chinese dumping,” Mr. Ramesh said.

The Congress has been attacking the government over its handling of the economy, claiming the issues of rising prices, decreasing private investment, and stagnating wages were hitting the common people hard.