FDI, FPI recovery reflects renewed confidence in Indian economy: RBI report
State of the Economy report says robust manufacturing, services and domestic demand sustained growth despite global uncertainties
The recovery in foreign direct investment (FDI) and foreign portfolio investment (FPI) in recent months reflects renewed optimism about the Indian economy, which remains among the world's fastest-growing major economies despite global uncertainties, according to the Reserve Bank of India's (RBI) latest State of the Economy report.
The report said robust performance in the manufacturing and services sectors, coupled with strong domestic demand, helped sustain economic activity through June.
It noted that strong inflows in April pushed net FDI to USD 6.5 billion during April-May FY27, up from USD 2.47 billion in the corresponding period last year.
Overall investment increased during the two-month period, although net FDI turned marginally negative in May due to lower gross inflows.
Financial services, manufacturing, wholesale and retail trade, and computer services accounted for nearly 80 per cent of total investments, while Japan, Singapore and Mauritius together contributed around 74 per cent of total equity inflows, the report said.
With net inflows in June, foreign portfolio investment (FPI) remained positive, supported by favourable debt market policies and easing geopolitical tensions. FPIs invested around USD 3.1 billion in debt and equity markets up to July 20.
The report said India's foreign trade continued to improve during the first quarter of FY27, driven by robust growth in both exports and imports.
It added that progress on other bilateral trade agreements, along with the operationalisation of the India-UK Comprehensive Economic and Trade Agreement, is expected to provide a significant boost to trade performance.
The RBI claims that expanding foreign investment inflows, steady foreign exchange reserves, and well-anchored external risk indicators all contribute to the country's external sector's stability and improving prospects.
As per the study, strong loan expansion was supported by significant improvements in liquidity conditions. Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits increased by USD 17.4 billion between June 8 and July 17, 2026, as a result of the RBI's concessional swap policies that were introduced in June.
It added that India has successfully managed supply chain disruptions and global uncertainty at home because to robust industrial and services activity.
