India FPI, FDI inflows set to rebound sharply in FY27: CareEdge
Synopsis
After a bruising FY26 that saw $16 billion in FPI outflows and net FDI of just $7 billion, CareEdge Ratings says India's capital account is turning a corner. With gross FDI up 65 per cent in April FY27 and policy tailwinds from G-sec tax breaks and a potential Bloomberg Index inclusion, net FDI could double to $15 billion — and the BoP may finally swing positive.
Key Takeaways
FPI flows into India are forecast to rebound in FY27 after a $16 billion net outflow in FY26, according to CareEdge Ratings .
Net FDI is projected to rise from $7 billion in FY26 to $15 billion in FY27.
Gross FDI grew 18 per cent YoY in FY26 to $94.8 billion ; April FY27 gross inflows surged 65 per cent to $15.3 billion .
Repatriation outflow growth slowed sharply to 5 per cent in FY26, down from 51.6 per cent in FY24.
Policy measures could attract $45–60 billion via FCNR(B), ECBs, and OFCBs; G-sec tax breaks and Bloomberg Index inclusion expected to boost FPI.
The rupee is forecast to average ₹93–94/USD in FY27; India's BoP is expected to turn positive after two deficit years.
Foreign portfolio investment (FPI) flows into India are expected to stage a strong rebound in FY27, reversing the $16 billion net outflow recorded in FY26, according to a report released on Monday, 20 July by CareEdge Ratings. The findings signal a broader recovery in India's capital account after two consecutive years of balance-of-payments deficit.
FDI Recovery Gathers Pace
Net foreign direct investment (FDI) is projected to nearly double, rising from $7 billion in FY26 to $15 billion in FY27, the CareEdge report said. This improvement is underpinned by healthy growth in gross inflows and a sustained moderation in repatriation outflows — the key drag that has offset gains in recent years.
Gross FDI climbed 18 per cent year-on-year in FY26 to $94.8 billion, and the momentum has accelerated into the new fiscal year, with April FY27 gross inflows surging 65 per cent to $15.3 billion. Notably, repatriation outflow growth has decelerated sharply — from 51.6 per cent in FY24 and 15.8 per cent in FY25 to just 5 per cent in FY26 — improving the net FDI picture considerably.
What CareEdge's Chief Economist Said
Rajani Sinha, Chief Economist at CareEdge Ratings, said India's capital account 'seems to be turning a corner after ending FY26 on a sombre note.' Sinha added that healthy gross FDI growth, combined with moderating repatriation and supportive policy measures, is expected to push net FDI from $7 billion to $15 billion in FY27.
Policy Tailwinds Driving FPI Optimism
Recent measures by the government and the Reserve Bank of India (RBI) are expected to attract sizeable inflows of $45–60 billion from FCNR(B) deposits, external commercial borrowings (ECBs), and overseas foreign currency bonds (OFCBs), the report noted.
On the FPI front, tax-related concessions for investors in government securities (G-secs), relatively lower Indian equity valuations, and the prospective inclusion of India's G-secs on the Bloomberg Global Aggregate Index are cited as key incentives likely to draw healthy portfolio flows. This comes amid a broader global reallocation away from markets perceived as higher-risk, which could benefit India's relatively stable macroeconomic position.
Rupee Outlook and Balance of Payments
CareEdge expects India's balance of payments (BoP) to turn positive in FY27 after two consecutive years of deficit, factoring in projected current account deficit (CAD) dynamics alongside improved capital flows. However, Sinha cautioned that the RBI's unwinding of its large forward book will cap any sharp appreciation in the currency.
The firm has marginally revised its rupee projection upward, now expecting the currency to average ₹93–94 per US dollar in FY27. With capital account dynamics turning more favourable, the trajectory of global risk sentiment and Fed policy will be closely watched as the year progresses.
Point of View
But the headline FDI figure masks a structural tension: gross inflows have been rising for years, yet net FDI has stayed depressed because repatriation — profits and capital being taken out — has grown almost as fast. The real story in FY27 is whether the moderation in repatriation holds, or whether a stronger rupee and improved corporate earnings prompt another round of profit repatriation. The Bloomberg G-sec inclusion is a genuine catalyst, but its timeline remains uncertain. And the RBI's decision to cap rupee appreciation through forward book unwinding is a deliberate trade-off — it protects exporters but signals the central bank is not yet confident enough in capital account stability to let the currency run. India's capital account is improving, not transformed.
NationPress
21 Jul 2026
Frequently Asked Questions
What is the FPI and FDI outlook for India in FY27?
FPI flows are expected to rebound in FY27 after a $16 billion net outflow in FY26, while net FDI is forecast to nearly double from $7 billion to $15 billion, according to CareEdge Ratings. Policy tailwinds including G-sec tax breaks and a potential Bloomberg Index inclusion are key drivers.
Why did India record a $16 billion FPI outflow in FY26?
The CareEdge report describes FY26 as ending on a 'sombre note' for India's capital account, with FPI outflows of $16 billion. The outflows reflected global risk-off sentiment and elevated equity valuations, though gross FDI inflows continued to grow during the same period.
What policy measures are expected to attract foreign inflows in FY27?
Government and RBI measures are projected to draw $45–60 billion via FCNR(B) deposits, external commercial borrowings, and overseas foreign currency bonds. Tax concessions for FPIs investing in G-secs and the prospective inclusion of Indian G-secs in the Bloomberg Global Aggregate Index are additional incentives.
What is CareEdge's rupee forecast for FY27?
CareEdge Ratings expects the rupee to average ₹93–94 per US dollar in FY27, a marginal upward revision from its earlier projection. The RBI's unwinding of its forward book is expected to limit any sharp currency appreciation.
Is India's balance of payments expected to improve in FY27?
Yes. CareEdge expects India's balance of payments to turn positive in FY27 after two consecutive years of deficit, driven by improved capital account dynamics and a projected moderation in the current account deficit.
