Officials and experts attribute this trend to the country having to compete with Mexico, Poland, and Vietnam, a preferred part of investors’ nearshoring and friendshoring policies after the Covid pandemic, and the US cornering a large share of tech-related investments.
“The US is cornering a disproportionate amount of technology related FDI as they are leading the GenAI wave,” said Debasish Mishra, chief growth officer, Deloitte South Asia.
Net FDI was negative $1.39 billion in January 2026 compared to negative $492 million in December 2025, according to the Reserve Bank of India, whereas gross FDI inflows were $5.67 billion and repatriation and disinvestment by foreign investors was $4.92 billion.
Growing overseas direct investment (ODI) outflows from the country is another cause of this trend. “The recent trend in net FDI inflows is associated with increased repatriation or disinvestment and rising ODI outflows due to liberalised rules in 2022,” said an official.
Minister of state for commerce and industry Jitin Prasada last month told Parliament that the increasing trend of repatriation indicates that India is not only attracting foreign capital but also delivering strong returns, which enhances its reputation as a reliable investment destination.
Though India is expected to remain the world’s fastest-growing major economy in the next couple of years, experts stressed on tax certainty and ease of doing business at the ground level to maintain investor confidence.
“Tax certainty is a critical lever for restoring investor confidence, and by reaffirming the grandfathering of pre-April 1, 2017 investments, this amendment provides timely relief to investors-strengthening India’s policy credibility and positioning the country for stronger FDI inflows in an increasingly competitive global landscape,” said Kunal Shah, Partner, Price Waterhouse &Co LLP.Strong macros
To promote FDI, the government has put in place an investor friendly policy, where most sectors, except certain strategically important sectors, are open for 100% FDI under the automatic route without government approval.
“On the FDI policy, the government’s room for manoeuvre is limited. Over 90% of FDI inflow already comes through the automatic route, leaving little scope for further liberalisation purely through policy relaxations,” said Sunil Kumar, Partner, Tax and Regulatory Services, EY India.