Foreign portfolio investment (FPI) flows into India are projected to bounce back in FY27 following a $16 billion outflow in FY26, as per a report by CareEdge Ratings. The net FDI is anticipated to increase from $7 billion in FY26 to $15 billion in FY27, driven by robust growth in gross inflows and an expected slowdown in repatriation outflows.
In FY26, gross foreign direct investment (FDI) surged by 18% year-on-year to $94.8 billion, and this momentum has carried over into FY27, with April gross inflows spiking by 65% to $15.3 billion. The report highlights a steady decline in the growth of repatriation outflows over the past two years, dropping from 51.6% in FY24 to 5% in FY26.
Chief Economist at CareEdge Ratings, Rajani Sinha, mentioned that India’s capital account appears to be on the upswing after a subdued FY26. Sinha expects a healthy rise in gross FDI inflows, coupled with a moderation in repatriation growth, to boost FDI from $7 billion in FY26 to $15 billion in FY27.
The report also indicates that recent policy initiatives by the government and the RBI are likely to attract substantial inflows ranging from $45-60 billion from FCNR(B), ECBs, and OFCBs. Tax-related measures for FPIs investing in G-secs, along with lower Indian equity valuations and the potential inclusion of India’s G-secs on the Bloomberg Global Aggregate Index, are expected to stimulate healthy FPI inflows.
Taking into account these factors and CAD projections, the report forecasts India’s BoP to shift to positive in FY27 after two consecutive deficit years. However, the RBI’s unwinding of its large forward book is expected to limit any sharp currency appreciation. The firm maintains a positive outlook on the rupee’s strength but slightly revises its projection, expecting the rupee to average 93-94/USD in FY27.
