Prelims: Economic and Social Development| Current events of national and international importance.
Why in News?
Recent data released in RBI reveals that Net FDI into India fell by over 96% to $353 million in 2024–25 from $10.1 billion in 2023–24.
- Foreign direct investment (FDI) – It refers to an ownership stake in a foreign company or project made by an investor, company, or government from another country.
- FDI investors typically take controlling positions in domestic firms or joint ventures and are actively involved in their management.
- Top sector-wise Gross FDI Inflows for 2024–25
- Manufacturing
- Financial services
- Electricity and energy
- Communication services
- Top countries contributing to India’s Gross FDI
- Singapore
- Mauritius
- UAE
- Netherlands
- USA
- OFDI (Outward Foreign Direct Investment) - It refers to investments made by Indian companies in foreign countries — through acquisitions, establishing subsidiaries, joint ventures, or branches.
- In 2024–25 over $29.2 billion were invested abroad by Indian companies.
- Indian OFDI mainly into Singapore, USA, UAE, Mauritius, Netherlands.
- Net FDI – It is the difference between Gross FDI and Outward direct investments by Indian firms and repatriation by overseas entities.
- Net FDI = Gross FDI inflows − (OFDI by Indian firms +Repatriation by foreign firms)
Repatriation refers to the profits, dividends, or capital from foreign companies gained from India that were sent back to their home countries.
- Net FDI reflects the net capital retained within India after outflows.
Reason for fall in net FDI Fall
- Highest Repatriation - $51.5 billion repatriated in 2024–25 which is the highest in last decade.
- Rise in OFDI - Indian firms invested $29.2 billion abroad which is a 75% increase from previous year.
- Pandemic Trend – Net FDI has been consistently declining declined post-pandemic.
Reference
The Hindu| India’s Net FD crashed by more than 96%
