Economic Survey 2025: FPI Fluctuates but Maintains Overall Positive Trend

Foreign Portfolio Investment (FPI) in India saw ups and downs throughout the financial year 2024-25. The flow of foreign money into Indian markets kept changing, reflecting global economic trends.

Despite these fluctuations, overall investment from foreign investors remained positive. There were periods of money moving out of the country due to rising geopolitical tensions and high stock prices, but investors remained confident in India’s strong economic growth and stable financial policies, keeping FPI inflows steady.

How FPI Moved in FY25

At the start of the financial year, foreign investors were cautious and withdrew funds from Indian markets. However, in June 2024, things changed, and they started investing again, encouraged by India’s strong economic performance.

Between June and September 2024, FPI inflows were positive, thanks to favorable economic conditions and strong earnings from Indian companies. But this did not last long. In October and early November 2024, investors pulled out USD 11.5 billion and USD 2.5 billion, respectively. The reasons? High stock prices, concerns about lower corporate earnings, and increasing global tensions.

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Despite this setback, December 2024 brought renewed investor confidence, and India saw net inflows of USD 3.1 billion, showing that foreign investors still see the country as a reliable investment destination.

Bond Market Becomes a Safe Bet for Foreign Investors

Investments in stocks saw frequent ups and downs but India’s bond market provided a safer option for foreign investors. The inclusion of Indian Government Bonds (IGBs) in major global bond indices, like JP Morgan’s Emerging Markets Bond Index, led to a surge in foreign investments in Indian debt securities.

Between October 2023 and June 2024, foreign investors poured Rs. 1.1 lakh crore into Indian bonds, making it an attractive asset. By December 2024, investments in Fully Accessible Route (FAR) securities had reached USD 28 billion, showing that investors were looking for long-term, stable returns amid global uncertainties.

India’s Strong Economy Continues to Attract Investors

Even with global challenges and stock market volatility, India’s strong economic foundation and well-managed financial policies continue to attract foreign investments. The country’s steady growth, disciplined government spending, and strong business environment have helped keep foreign inflows largely positive.

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However, there has been a significant drop in FPI inflows compared to the previous year. From April to December 2024, India received USD 10.6 billion in FPI inflows, compared to USD 31.7 billion during the same period in 2023. This decline pinpoints how global economic challenges are affecting investor decisions, but at the same time, India’s economy remains resilient in dealing with these changes.

What to Expect in 2025?

The future of FPI in India will depend on global events, such as interest rate decisions by central banks, geopolitical developments, and domestic economic policies. Experts predict more fluctuations in investment flows in the short term but India’s pro-investment policies, growing bond market, and strong domestic economy are expected to keep foreign investors interested in the long run. Despite the ups and downs, India remains a preferred investment destination for global investors.

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