The Economics of Falling Net FDI in India

Economy · Thursday, 11 June 2026

India's net FDI has significantly declined, highlighting structural economic challenges.

Quick highlights

• Net FDI fell from $44 billion in FY21 to less than billion in FY25.
• Gross FDI reached $94.6 billion in FY26.
• Outward FDI flows are concerning, indicating potential capital flight.

Context

A comprehensive analysis reveals a contraction in net FDI.

Key Facts

Net FDI has seen a drastic decline, raising alarms among policymakers.

Significance

The decline in net FDI impacts long-term economic growth.

Challenges / Way Forward

Policies need to focus on attracting long-term investments.

Exam Angle

Relevant for GS Paper III - Economic Development.

Remember this

• Net FDI fell to $7.6 billion in FY26.
• Gross FDI inflows reached $94.6 billion.
• Outward FDI is rising, indicating capital flight.

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