Recovery In FDI, FPI Reflects Renewed Confidence In Indian Economy: RBI Report

New Delhi, Jul 23 (KNN) The recovery in foreign direct investment (FDI) and foreign portfolio investment (FPI) in recent months reflects renewed confidence in the Indian economy, which continues to remain among the fastest-growing major economies despite global uncertainties, according to the Reserve Bank of India's (RBI) latest State of the Economy report.

The report said economic activity remained resilient through June, supported by healthy domestic demand and strong performance of the industrial and services sectors.

FDI Inflows Strengthen Despite May Dip
The report noted that net FDI rose to USD 6.5 billion during April-May FY27, compared with USD 2.47 billion in the corresponding period last year, supported by robust inflows in April. 

While net FDI turned marginally negative in May due to lower gross inflows, overall investment remained higher during the two-month period.

Japan, Singapore and Mauritius together accounted for around 74 percent of total equity inflows, with financial services, manufacturing, wholesale and retail trade, and computer services contributing nearly 80 percent of total investments.

FPI Flows Remain Positive Amid Easing Global Tensions
Foreign portfolio investment also remained positive, with net inflows recorded in June, aided by policy measures for the debt market and easing geopolitical tensions. 

Up to July 20, FPIs invested around USD 3.1 billion across equity and debt segments.

Trade, External Sector Outlook Remains Positive
The report highlighted that India's external trade maintained momentum during the first quarter of FY27, supported by strong growth in exports and imports. 

It said the operationalisation of the India-UK Comprehensive Economic and Trade Agreement, along with progress on other bilateral trade agreements, is expected to further strengthen trade performance.

According to the RBI, the country's external sector remains stable with improving prospects, supported by rising foreign investment inflows, well-anchored external vulnerability indicators and comfortable foreign exchange reserves.

The report also said liquidity conditions improved further, supporting robust credit growth. The RBI's concessional swap measures announced in June led to a rise of USD 17.4 billion in Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits between June 8 and July 17, 2026.

Inflation Edges Up as Food, Fuel Prices Rise
On the domestic front, the report said India has navigated global uncertainties and supply chain disruptions effectively, backed by resilient industrial and services activity. 

While the southwest monsoon has been uneven, the report noted that comfortable foodgrain stocks could help contain food inflation.

Headline Consumer Price Index (CPI) inflation edged up in June due to higher food and fuel prices, while core inflation remained unchanged. Wholesale Price Index (WPI) inflation also increased marginally during the month.

(KNN Bureau)