Inside India newsletter: India’s investment appeal dims as firms and funds pivot to the U.S.
India's foreign direct investment has increased, but net FDI is at a near all-time low due to significant capital repatriation by foreign firms and rising overseas investments by Indian companies. Experts indicate that multinational firms are prioritizing profit extraction over capacity expansion in India. This trend raises concerns about India's long-term investment appeal as capital shifts back to developed markets like the U.S.
- ▪India attracted $90.8 billion in foreign direct investment over the past year, a 13% increase year on year.
- ▪Repatriation of capital by foreign firms exceeded $50 billion for the second consecutive year.
- ▪Overseas investment by Indian companies rose to $35.8 billion, marking a 2.6 times increase over two years.
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While India attracted foreign direct investment of $90.8 billion on a 12-month trailing basis ending January 2026, up 13% year on year, they were eclipsed by higher repatriation of capital by foreign firms and a rise in overseas investment by Indian companies, taking net FDI to a "near all-time low," according to a Morgan Stanley report last month.In a double whammy for India, while repatriation was more than $50 billion for a second consecutive year, overseas investment by Indian companies rose to $35.8 billion, rising 2.6 times over two years.A rise in repatriation signals that multinational firms are extracting profits rather than expanding capacity, experts said.Instead of profit reinvesting, global firms are "harvesting returns" from India to finance investments elsewhere, said Hanna…
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