The Morning Brief

Explaining India’s Record FDI Freefall

8 snips
May 27, 2025
Indranil Sengupta, an economist and professor at Shiv Nadar University, shares insights on India's startling 96% decline in net Foreign Direct Investment (FDI). He discusses the surge in disinvestments and the trend of Indian firms investing abroad. The conversation dives into the shifting dynamics of global investment, questioning whether this is a temporary setback or indicative of deeper issues. Sengupta also reflects on how India's economic landscape is evolving amid rising interest in other emerging economies.
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INSIGHT

Paradox of India’s FDI Freefall

  • India is attracting billions in foreign direct investment but experiencing a dramatic net FDI decline due to high divestments and capital outflows.
  • Indian firms are investing abroad more, resulting in a 96% plunge in net FDI despite record gross inflows.
INSIGHT

Maturity Signal in FDI Flows

  • Gross FDI inflows rose 14% to $81 billion, but record repatriations of $49 billion and $29 billion in outward FDI led to a minimal net inflow.
  • This signals a mature market and growing global acceptance of Indian entrepreneurship.
ANECDOTE

Major FDI Exits Amid IPO Boom

  • Hyundai reduced its equity from 100% to 82%, reflecting significant divestment.
  • Swiggy and British American Tobacco also saw major investor exits through IPOs or share sales.
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