Net foreign direct investment into India, a key barometer for the country’s appeal among global investors, rose sharply to $7.7 billion in 2025-26 from a multi-year low of about $0.95 billion a year ago.

Experts, however, cautioned that New Delhi would need to sustain efforts to attract long-term capital amid mounting uncertainty triggered by the war.

A bulletin published by the Reserve Bank showed gross FDI crossing $90 billion for the first time, reaching $94.5 billion during the last fiscal. This broke the previous record of $84.8 billion reported in 2021-22.

The central bank cited the net FDI flow as a key weapon to deal with the external headwinds. “…Robust services exports, positive net FDI flows, foreign exchange reserve buffers and a number of proactive policy measures undertaken by the government and the RBI are likely to cushion the Indian economy against external headwinds,” the bulletin said.

Observing that the conflict in West Asia continued to exert pressure on commodity markets, global trade flows and supply chains, contributing to volatility in financial markets, the RBI stated that the near-term outlook for India remained “somewhat clouded”.

Aditi Nayar, chief economist at rating agency ICRA, said the improvement in net FDI flows was encouraging but cautioned that the expected widening of India’s current account deficit in FY27 and the associated rise in financing needs remained a concern.

The RBI data showed net FDI maintaining a positive trend for the second consecutive month in March at $1.6 billion after remaining in negative territory for five months in a row.

A granular look at the data revealed that repatriation and disinvestment by foreign companies from India rose to $53.5 billion in FY26, up from $51.4 billion. Likewise, outward FDI, or investment by Indian companies abroad, rose to $33.2 billion in FY26 from $28.1 billion a year ago.

“Strong gross FDI inflows signal continued investor confidence in India despite geopolitical volatility. The recovery in net FDI is equally encouraging, but the West Asia conflict, elevated oil prices and potential pressure on the rupee reinforce the importance of stable, long-term capital,” said Moin Ladha, partner at Khaitan & Co.

He suggested that the policy focus needed to remain on investor certainty, while ensuring capital flows are genuine, compliant and supportive of India’s broader external-sector resilience.

Rishi Shah, partner and economics advisory lead at Grant Thornton Bharat, observed that “the FDI recovery is real but should not be over-read”. “Gross FDI at $94.5 billion, up from $80.6 billion, confirms India remains a preferred destination, and net FDI’s bounce to $7.7 billion from the multi-year low of $1 billion is welcome,” Shah said.

According to him, the $87 billion leaving India (the gap between gross and net FDI) as repatriation, disinvestment and outward FDI reflects Indian corporates maturing internationally rather than a vote against India