According to a report by CareEdge Ratings, India’s net Foreign Direct Investment (FDI) inflows are projected to stage a strong recovery, reaching USD 15 billion in FY27. This anticipated financial rebound follows a highly subdued performance in FY26, when net FDI inflows plummeted to just USD 6.9 billion, well below the historical five-year average of USD 35.1 billion. The prior economic slowdown significantly impacted India’s overall capital account balance, narrowing the final surplus from USD 16.6 billion to a mere USD 1.9 billion by the close of the fiscal year.
The expected economic turnaround is primarily driven by a visible stabilisation and a steady moderation in profit repatriation outflows by international firms. Data show that the growth rate of these outflows cooled progressively from 51.6% in FY24 to 15.8% in FY25, hitting a low of 5% in FY26, before contracting further by 8.7% in April FY27. This shift indicates that the intense post-pandemic phase of corporate profit-booking and venture-capital exits has finally peaked and is beginning to fade.
You Might Also Like- Aurum PropTech Acquires Housing.com in Rs 458 Cr Deal
Furthermore, the Indian government has introduced vital policy adjustments, replacing rigid, blanket restrictions on investments from land-bordering nations with a nuanced, threshold-based framework. This strategic reform is specifically intended to attract foreign manufacturing joint ventures and capture a larger share of outbound capital from China. Simultaneously, domestic outbound investments remain robust, growing 20.1% in FY26. Local debt markets are also set to gain momentum due to targeted tax exemptions for foreign portfolio investors, an expanded FAR bond universe, and higher investment ceilings for non-resident Indians.
