Overseas investors make close to $100 billion from India investments

Income repatriation by overseas investors in Indian assets – traded financial securities such as bonds and stock, and direct investments in companies operating in the country – soared to within a touching distance of $100 billion, cementing the credentials of Asia's second-largest economy as a top global investment destination.

Overseas investors took back home a record $97.7 billion as their profits (dividend, interest income, etc) from their investments in debt, equity and other fixed income instruments in FY25, compared with $87.5 billion in FY24, Reserve Bank of India (RBI) data showed.

Besides foreign direct investments ( FDI) in Indian firms, which yielded dividends and profit income for overseas shareholders, they also made money in Indian debt investments. Last year saw higher inflows in Indian debt instruments as local debt was included in the JPMorgan bond index.

“The income earnings have been supported by gross FDI inflows that continued to rise in FY25, besides FPI inflows into the bond index” said Gaura Sengupta, chief economist at IDFC First Bank. “Debt investments performed well as domestic bond yields were lower.”

Although the RBI data did not give the source of dividend and profits, a sizable portion of private equity exits comprising dividend and profits was reflected in the investment income.

To be sure, the nation brought back home 33% higher profits, amounting to $45 billion. This was largely due to the RBI earning 37% higher returns through deployment of foreign exchange reserves. Income from reserves deployment amounted to $21.7 billion in FY25, compared with $15.8 billion in the previous year, RBI data showed.

This has helped rein in the deficit in the investment income in the current account. The deficit in investment income was lower at $52.6 billion in FY25, compared with a deficit of $53.6 billion in the previous year.

“Mirroring trends in overall two-way foreign investment flows last year, repatriation of dividend and interest income by foreign investors was offset by an increase in Indian companies setting out more investments in overseas markets, which likely resulted in a jump in inward flow of related income” said Radhika Rao, executive director, DBS Bank. “These dynamics are likely to make the investment income segment better balanced, under the current account, compared to being a consistent drag in the past.”