India’s foreign exchange reserves and strong economic fundamentals will help cushion against external shocks and increased volatility in the global markets, the RBI said on Monday.
The West Asia conflict and US investigation on its trade partners have revived concerns over energy security, tariffs and global supply chains, the central bank said in its State of the Economy report. A prolonged war would also further darken an already fragile global outlook.
Given India’s dependence on crude oil, “the evolving situation requires close monitoring and proactive measures to limit adverse spillovers”, the report said. However, “the capacity and resilience of the Indian economy to absorb external shocks have strengthened over time”, it said.
India’s $710 billion of foreign exchange reserves, strong growth and sound macroeconomic fundamentals give the country strength, it said.
Net FDI
Net FDI remained negative for the fifth consecutive month in January, owing to higher repatriation and outward FDI from India. Gross inward FDI rose to $79.3 billion in April-January of FY26, up from $69.2 billion in the same period of the last fiscal. Net FDI declined to $1.7 billion during the 10 months of the fiscal year from $2.2 billion during the corresponding period a year ago.
After staging a comeback in February 2026, foreign portfolio investors (FPIs) turned net sellers again in March 2026, driven by deteriorating global investor sentiment
following the conflict in West Asia. During FY26 so far (up to March 18), net FPI registered outflows to the tune of $14.2 billion.
