Indian Outward FDI Surges to $47 Billion in Historic Post-Pandemic Recovery

India’s outbound foreign direct investment has registered a powerful turnaround in the post-pandemic era, expanding rapidly even as global capital outflows experience widespread contractions.

India’s outward foreign direct investment has rebounded strongly since the COVID-19 period, in contrast to the world where outward FDI is contracting, a report said on Tuesday.

The report from Bank of Baroda said outward FDI climbed sharply to $42 billion in FY25 from $25 billion in FY24 and retained momentum at $47 billion in FY26, underscoring a steep U‑shaped recovery since COVID-19 period.

Indian companies are increasingly seeking direct ownership through FDI, and this reflects growing intentions of Indian companies to expand into other countries and leverage the opportunities presented.

The share of the route of investing in a wholly owned subsidiary is also significantly higher, the report said, adding that the equity component of outward FDI has risen to 42 per cent in FY26 from 31 per cent in FY17.

The sector-wise profile shows financial services comprising the major pie of outward FDI, reflecting a preference for knowledge-based IT-related services over the traditional capital-intensive manufacturing sector, said Dipanwita Mazumdar, Economist, Bank of Baroda.

The growing importance of GIFT City is also a major contributor towards the trend and the share of outward FDI in major advanced economies is lower.

Hence, this leaves more potential in the future in the time of new trade and investment agreements, the report noted.

Excluding guarantees, India’s outward FDI stood at $28 billion in FY26. The pace of increase in India’s FDI has been the sharpest in FY25, where it went up to $42 billion from $25 billion in FY24.

Singapore has the highest share of 30 per cent in India’s outward FDI and the elevated share is consistently maintained since FY17, possibly due to tax rule changes and treaty amendments in 2016.

Other than Singapore, maximum concentration is in the United States, and the destination share to the US rose to 13.6 per cent in FY26 from 9.9 per cent in FY17.

Future Outlook

The continuing expansion of India’s outbound capital flows points toward an increasingly globalized footprint for domestic corporations. As the country negotiates fresh bilateral trade pacts and investment agreements, advanced economies represent an untapped frontier for domestic capital. Furthermore, the operational scaling of GIFT City as an international financial gateway is projected to permanently alter the mechanics of corporate outflows, enabling smoother equity deployments into foreign subsidiaries and knowledge-intensive sectors worldwide.

FAQs

What was the total value of India’s outward FDI in FY26?

India’s outward foreign direct investment reached $47 billion in FY26, maintaining the strong growth momentum observed during the previous fiscal year.

Which country receives the highest share of Indian outbound investment?

Singapore holds the largest share, accounting for 30 per cent of India’s outward FDI, a dominant position it has consistently maintained since FY17.

How has the equity composition of India’s outward FDI changed over time?

The equity component of Indian outbound investments has risen significantly, reaching 42 per cent in FY26 compared to just 31 per cent in FY17.

What sectors are driving Indian corporate investments abroad?

Financial services and knowledge-based IT services represent the largest share of outward FDI, showing a clear preference among domestic companies over traditional capital-intensive manufacturing.