India's Net FDI Inflows Drop For The Fifth Month In A Row
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India’s net FDI stayed negative for five months as profit repatriation surged to $4.92 billion in January. Global conflicts and rupee pressure pushed capital to Mexico and Vietnam, which saw record inflows from nearshoring and China-plus-one shifts.
India’s foreign direct investment (FDI) inflow has been lower than the outflows, keeping net FDI in the negative for five months in a row. In January 2026, India saw $1.39 billion leave the country more than what came in. That's much higher than the $492 million net outflow in December 2025.
Investments flowing into India stayed steady at $5.67 billion but foreign firms pulled out $4.92 billion through profit repatriation and selling off their stakes, a sharp jump from earlier months.
Indian companies also sent out $2.14 billion as outbound investments, adding to overall outflows. For the April 2025 to January 2026 period, net FDI dropped sharply. It stood at $1.65 billion, down nearly 25% from the same months a year earlier.
Why Are Net FDI Investments Under Pressure In India?
Rising global conflicts, mainly the West Asia war and rupee pressure are reducing net FDI inflows into India. Geopolitical uncertainty causes investments to flow into safe destinations, which postpones long-term investments.
The pattern of rich Indians moving money out of the country is yet another indicator of reduced appetite for investment within the country. Such movements of capital mean less reinvested earnings, an essential part of FDI.
Economic Survey Highlighted Shortcomings
The Economic Survey for 2025–26 points to a clear gap. FDI into India is not keeping pace with its potential. This comes even as the country shows steady growth, stable numbers and a large consumer base. At the same time, places like Vietnam, Malaysia, Thailand, Taiwan, Australia and the Philippines are attracting more global money.
The report made a simple point. Foreign investors care more about speed and clear rules. They also look for strong political backing. A mix of overlapping incentives does not help much.
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Mexico, Vietnam See High Investments
Mexico attracted a record $40.9 billion in FDI in 2025. Global companies are choosing it to stay closer to the US market.
Vietnam also saw strong inflows. FDI rose 61.5% in early 2026 as manufacturers moved some production out of China.
The Economic Survey pointed to a clear trend. A few emerging economies are stepping in as connector countries as supply chains shift and tariff risks rise.
Sources:
The Economic Times
The Hindu
Business Standard
The New Indian Express
Mexico Business News
VnEconomy
This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
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