Understanding India's FDI: A Negative Month vs. A Positive Long-Term Trend
UPSC Relevance
Prelims: Indian Economy (Key concepts of FDI, Net FDI, Gross FDI, Repatriation, Outward FDI, Balance of Payments, RBI).
Mains:
General Studies Paper 3 (Economy): Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment; Investment models.
Key Highlights from the News
The Net Foreign Direct Investment (Net FDI) in India plummeted by 159% to a negative value (-$616 million) in August 2025.
This means that more foreign currency flowed out of India than came in during that month.
This was due to a decrease in Gross inflows to India, an increase in foreign companies Repatriation / Disinvestment (taking their money back), and an increase in Outward FDI (Indian companies investing abroad).
However, the long-term trend is positive: The cumulative Net FDI for the first five months of the current fiscal year (April-August) increased by 121% compared to the previous year, reaching $10,128 million.
This indicates that while single-month figures can be volatile, the long-term trend of investment into India remains strong.
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