India’s Net FDI Inflows May Double to USD 15 Billion in FY27: CareEdge Ratings

New Delhi: India’s net foreign direct investment (FDI) inflows are projected to recover significantly in FY27, with CareEdge Ratings estimating that they could rise to USD 15 billion, more than double the level recorded in the previous financial year. The improvement is expected to be driven by stronger gross FDI inflows and a slowdown in the pace of investment repatriation by foreign companies.

According to the report, India’s capital account witnessed a sharp decline in surplus during FY26, reflecting weaker foreign investment and continued outflows. Net FDI stood at around USD 6.9 billion, remaining well below the country’s long-term average. At the same time, foreign portfolio investors (FPIs) pulled out significant funds due to global geopolitical uncertainties, adding pressure to capital flows.

CareEdge Ratings noted that one of the encouraging trends is the gradual decline in repatriation outflows. The report said the pace of profit repatriation has moderated considerably over the past three years, indicating that the wave of post-pandemic exits by private equity and venture capital investors is beginning to ease. Early data for FY27 also suggests a further decline in such outflows.

The report also highlighted that the number of initial public offerings (IPOs) and the amount raised during the first quarter of FY27 were lower than the same period last year, indicating a more measured pace of investor exits through capital markets.

Another major factor supporting the outlook is the government’s revised foreign investment policy. India has replaced the broad restrictions imposed on FDI from neighbouring countries in 2020 with a more targeted framework based on investment thresholds. The change is expected to encourage strategic investments and joint ventures, particularly in the manufacturing sector, while creating opportunities to attract a greater share of global investment.

The report added that India’s outbound investments by domestic companies continue to remain strong, reflecting growing confidence among Indian businesses expanding overseas. At the same time, measures such as expanding the Fully Accessible Route (FAR) bond market, offering tax benefits to foreign investors in government securities and increasing investment limits for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) are likely to improve foreign portfolio investment, especially in the debt segment.

Based on these developments, CareEdge Ratings expects India’s net FDI inflows to reach USD 15 billion in FY27, signalling a stronger investment environment and improved confidence among global investors.