Reserve Bank of India (RBI) Governor Sanjay Malhotra addressed concerns over foreign investment trends during the Monetary Policy Committee (MPC) meeting on June 6, highlighting that while net foreign direct investment (FDI) has moderated, gross FDI inflows rose sharply.
Net FDI, which accounts for total foreign investment inflows minus outflows such as profit repatriation and disinvestment.
Gross FDI, on the other hand, captures the total capital inflows into the country, including fresh investments, reinvested earnings, and intra-company loans.
However, when evaluating a country’s investment climate, Malhotra said, that it is the gross FDI that offers a more accurate picture.
In the past year, gross FDI into India surged by 14 percent, reaching $81 billion.
In that regard, India saw a 14 percent increase in gross FDI, reaching $81 billion in the last fiscal year.
According to Malhotra, this indicates continued confidence among global investors in India’s long-term growth story.
The moderation in net FDI was largely attributed to a rise in repatriation of profits and investments, a development the Governor described as "a good sign of a maturing market, where investors are confident of smooth entry and exit."
Malhotra also pointed to increased outbound investments by large Indian companies, suggesting growing global ambition and integration of Indian corporates in international markets.
However, Foreign portfolio investments (FPIs) through India dropped to $1.7 billion, as foreign investors booked profits in equities.
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