'All economic fundamentals are fine': FM Sitharaman responds to net FDI concerns

Finance Minister Nirmala Sitharaman on Monday addressed concerns over India's net foreign direct investment (FDI), which has remained negative for four consecutive months. Responding to a question on declining net FDI figures, Sitharaman said India's macroeconomic indicators, policy stability, and governance record remain strong.

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"More than a concern - I've been saying this, not that I'm saying this now - you think global capital funds move based on your macroeconomic performance, on your government stability, policy stability, taxation stability, predictability for businesses, and a law-abiding economy. You then expect a flow of funds to move towards such economies," she said during a press briefing after the customary Post-Budget Meet.

The FM said that all the fundamentals are fine and key indicators were clearly indicating that over the next couple of years, the economy "will be going at that kind of a level". "Stable government, taxation policy - everyone says that there's been absolute certainty. So you would expect the funds to flow towards such economies like India. But it doesn't come."

Sitharaman suggested that non-economic factors may be behind the drop in net FDI. "Certainly, they're not economic or commercial reasons," she said. "They're not reasons based on the economy and its strength. They are something else. They're probably strategic. Probably global politics. We don't know."

She added that if capital was not flowing as theory would suggest, policymakers would need to examine what might be holding it back.

RBI: Gross FDI rising, repatriations driving net decline

Reserve Bank of India Governor Sanjay Malhotra, who was also present, clarified that the gross FDI was still up and withdrawals of earlier investments were pulling down net FDI. "Gross FDI is increasing. Last year, it increased by about 14-15%. Even this year, gross FDI has increased, and the growth rate is also high."

He explained that higher repatriations were pulling down the net figure. "It's because of repatriations of those people who had done earlier FDI that it's gone out, so that the net has decreased. And similarly, our people, because now they are feeling stronger, emboldened, the various measures taken domestically to strengthen our economy, they are going and investing more abroad."

FDI: What the data shows

RBI data released earlier showed net FDI stood at negative $1.61 billion, compared to negative $189 million in December 2024. 

Repatriations in December 2025 rose to $7.5 billion, up from $5.40 billion a year earlier. Net outward FDI increased 30.5% year-on-year to $2.74 billion. However, gross inward FDI remained robust. During April–October, inflows rose to $8.58 billion from $7.32 billion in the same period last year.

According to the RBI bulletin, "During April–December 2025, FDI remained higher than in the same period last year, both in gross and net terms."

Singapore, the Netherlands, and Mauritius accounted for more than 80% of total inflows. Key recipient sectors included transport, manufacturing, computer services, and electricity and energy.

Outward FDI destinations included Singapore, the US, the UAE, the UK, and the Netherlands, with financial services and wholesale trade among major sectors.