India's outward FDI hits $47bn in FY26, defying global contraction
Synopsis
While global outward FDI is contracting, India's is surging — from $25 billion in FY24 to $47 billion in FY26, a U-shaped post-COVID recovery that Bank of Baroda says reflects a structural shift: Indian firms are no longer just receiving foreign capital, they are actively deploying it abroad, with Singapore and the US as primary destinations.
Key Takeaways
India's outward FDI rose to $47 billion in FY26 , up from $42 billion in FY25 and $25 billion in FY24.
The sharpest single-year increase was in FY25 , per a Bank of Baroda report released on 23 June .
Equity component of outward FDI climbed to 42 per cent in FY26 from 31 per cent in FY17.
Singapore holds the largest destination share at 30 per cent ; the US share rose to 13.6 per cent in FY26 from 9.9 per cent in FY17.
Financial services and IT-related sectors dominate the sectoral profile of outward FDI.
GIFT City is identified as a growing structural contributor to outward FDI flows.
India's outward foreign direct investment (FDI) has staged a sharp recovery since the COVID-19 disruption, reaching $47 billion in FY26 — even as global outward FDI continues to contract, according to a report released on Tuesday, 23 June. The findings, published by Bank of Baroda, describe a steep U-shaped rebound that underscores the growing ambition of Indian corporations to build direct ownership stakes abroad.
The Numbers Behind the Rebound
Outward FDI climbed from $25 billion in FY24 to $42 billion in FY25 — the sharpest single-year rise in the series — before accelerating further to $47 billion in FY26. Excluding guarantees, the figure stood at $28 billion in FY26, according to the report.
The equity component of outward FDI has risen markedly, climbing to 42 per cent in FY26 from 31 per cent in FY17. The report notes a significantly higher share of investments routed through wholly owned subsidiaries, signalling a preference for direct control over portfolio-style exposure.
Sectors and Destinations Leading the Charge
Dipanwita Mazumdar, Economist at Bank of Baroda, noted that financial services account for the largest share of outward FDI, reflecting a corporate preference for knowledge-based, IT-related services over traditional capital-intensive manufacturing. This sectoral tilt aligns with the broader shift in India's export profile toward services.
Singapore retains the top destination slot with a 30 per cent share of India's outward FDI — a position it has held consistently since FY17, reportedly linked to tax rule changes and treaty amendments in 2016. The United States is the second-largest destination, with its share rising to 13.6 per cent in FY26 from 9.9 per cent in FY17.
GIFT City's Growing Role
The report highlights the rising importance of GIFT City — Gujarat International Finance Tec-City — as a structural contributor to outward FDI flows. As an international financial services centre, GIFT City has provided Indian firms a regulated gateway for cross-border capital deployment, adding a new dimension to how outward investment is structured and routed.
What This Signals for India's Global Ambitions
The report points out that India's share of outward FDI directed toward major advanced economies remains relatively low, which it frames as an opportunity rather than a gap. With new trade and investment agreements under negotiation, the potential for further diversification of destination markets is considerable. This comes amid a broader global environment where outward FDI is shrinking — making India's counter-trend trajectory all the more notable.
As Indian companies deepen their global footprint through direct ownership, the trajectory of outward FDI will be a key indicator of whether India's corporate sector can sustain this momentum beyond the post-COVID catch-up phase.
Point of View
Not just a post-COVID bounce — the rising equity share and the preference for wholly owned subsidiaries suggest Indian firms are seeking control, not just returns. Yet the concentration risk is real: Singapore alone accounts for 30 per cent of outflows, a share partly explained by treaty engineering rather than organic business logic. The low penetration of major advanced economies is framed as opportunity, but it also reflects the limited global brand equity of most Indian multinationals outside IT and pharma. The next test is whether new trade agreements translate destination diversification from aspiration to data point.
NationPress
23 Jun 2026
Frequently Asked Questions
How much has India's outward FDI grown since the COVID-19 period?
India's outward FDI has rebounded sharply from $25 billion in FY24 to $42 billion in FY25 and further to $47 billion in FY26, according to a Bank of Baroda report. This represents a steep U-shaped recovery from the COVID-19 disruption period.
Which country receives the largest share of India's outward FDI?
Singapore receives the largest share at 30 per cent of India's outward FDI, a position it has maintained consistently since FY17. This is reportedly linked to tax rule changes and treaty amendments made in 2016.
What sectors are driving India's outward FDI?
Financial services and IT-related, knowledge-based sectors account for the largest share of India's outward FDI, according to Bank of Baroda economist Dipanwita Mazumdar. This reflects a shift away from traditional capital-intensive manufacturing.
What is GIFT City's role in India's outward FDI?
GIFT City — Gujarat International Finance Tec-City — is identified in the Bank of Baroda report as a growing contributor to outward FDI flows. It provides Indian firms a regulated international financial services centre for structuring cross-border investments.
Why is India's outward FDI trend significant globally?
India's outward FDI is rising even as global outward FDI contracts, making its trajectory a counter-trend signal. The report suggests that relatively low exposure to major advanced economies leaves significant room for future growth, especially as new trade and investment agreements take shape.
