Is outbound FDI rising at the expense of domestic capex?

INDIA'S NET FOREIGN direct investment (FDI) inflows merit serious attention as they dramatically plunged to $353 million last fiscal.

- N CHANDRA MOHAN The writer is an economics and business commentator based in New Delhi

This is due to record levels of repatriations and disinvestments and rising outbound FDI despite healthy gross inflows. Net FDI inflows were as high as $44 billion in FY21 and have been sharply reducing since then, especially over the last two fiscals. While repatriations and dividends have been commented upon, less attention has been paid to India Inc's investments abroad which rose almost threefold to $29 billion in FY25 from $11 billion in FY21. The concern is that Indian firms are expanding globally—which should be welcomed—while they are hesitant to invest domestically. At a time of adverse global headwinds due to policy-related uncertainties, a private sector-led investment push will no doubt bolster India's GDP growth but there is no evidence so far of a virtuous capex upswing. In this milieu, India's outbound FDI is intriguingly gathering strength.