India saw a robust inflow of foreign direct investment (FDI) during the first quarter of FY26 with gross inflows reaching $25.2 billion from $22.8 billion in the corresponding quarter last year, according to the Finance Ministry's financial review for the month released on Friday.
It represents a 10.5 per cent year-on-year growth, and if the pace maintains itself over the course of the year, gross FDI inflows for the year may reach nearly $100 billion.
The report further added that the inflows of equity improved, while repatriations were still largely comparable to the levels of Q1 FY25. Therefore, the net FDI inflows were reported to be $4.9 billion in the April–June quarter of 2025. It further added that gross FDI was at its best level over the last four years in June 2025.
India’s current account deficit (CAD) narrowed significantly to $2.4 billion, or 0.2 per cent of GDP, in Q1 FY26, from $8.6 billion (0.9 per cent of GDP) in the same quarter a year earlier. The decline was largely attributed to higher net invisible receipts, primarily remittances.
Exports of services were a major contributor to this strengthening, with net receipts increasing to $47.9 billion in Q1 FY26 from $39.7 billion in Q1 FY25, rising 20.7 per cent year-on-year. Inflows of remittances also increased robustly, growing by 16.1 per cent to $33.2 billion. Remittances account for 13 per cent of India's current account receipts, lending essential support to consumption by households and macroeconomic stability as a whole.
On the investment side, foreign portfolio investors (FPI) withdrew $2.3 billion in August 2025, led by $4 billion of equity outflows. But this was partially muted by $1.4 billion of net inflows into the debt segment.
India's foreign exchange reserves continued to be strong at $703 billion as of September 12, 2025. The reserves offer an import cover of 11.6 months and amount to 94.8 per cent of the nation's total external debt as of end-March 2025.
The ministry also warned that international trade continues to be heavily beset by headwinds. Increased tariff-related uncertainties, persistent geopolitical tensions, and supply chain disruptions have reshaped the contours of international commerce. Although trade agreements previously remained stabilising forces that capped uncertainty, the report noted that 2025 has witnessed uncertainty hitting all-time highs, which are majorly challenging international trade.
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