Finance Ministry Flags Concerns Over Rising FDI Outflows by Indian Companies

The surge in outward foreign direct investments by Indian companies has raised eyebrows within the finance ministry.

As per the Hindu report that quoted RBI’s data, overseas investments by Indian companies stood at $29.2 billion in 2024-25, up 75% from the previous year. Following this, India’s net foreign direct investment (FDI) fell by 96% to just $0.4 billion.

“That Indian overseas direct investment increased nearly by $12.5 billion during the year FY25, even as uncertainty reigned in the world, warrants attention, especially given their cautious attitude towards domestic investment,” the Department of Economic Affairs of the Ministry of Finance noted in its Monthly Economic Review (MER) released on Tuesday (May 27, 2025).

A Centre for Monitoring Economy (CMIE) data shows that the Indian private sector is cautious about its plans, as exhibited by a rising ratio of projects cancelled versus new ones announced.

An analysis done by The Hindu of the CMIE data showed a grim reality. It stated that the ratio of dropped projects in proportion to the newly announced projects surged to 36% in 2024-25 from 30.8% in 2023-24,and 21.8% in 2022-23. A higher ratio indicates higher caution.

As per the survey, Indian Incs were expected to invest ₹6.6 lakh crore in 2024-25, up 57% from the ₹4.2 lakh crore of actual capital expenditure they incurred in 2023-24. In FY26, the number is expected to tumble at ₹4.9 lakh crore, the survey stated.

“The slightly lower intended capital expenditure for FY26, though still above FY24 levels, reflects cautious planning after a strong FY25,” the MER noted. In a nutshell, the MER said the trend indicates growing corporate confidence and a “judicious approach to investment” in an evolving global scenario.