Net FDI jumps to 45-month high in February 2026, breaking six-month negative streak

Net Foreign Direct Investment (FDI) into India turned sharply positive in February 2026, reaching $4.6 billion — the highest net FDI figure in 45 months (sin...

What Happened

Net Foreign Direct Investment (FDI) into India turned sharply positive in February 2026, reaching $4.6 billion — the highest net FDI figure in 45 months (since May 2022) and a complete reversal from negative $703 million in February 2025.
This broke a six-consecutive-month streak of negative net FDI (August 2025 to January 2026), during which repatriations and disinvestments by foreign companies exceeded fresh inflows.
The recovery was driven by higher gross FDI inflows and a simultaneous decline in repatriations; gross FDI equity inflows in February 2026 grew approximately 61.6% to a seven-month high of nearly $9 billion.
Cumulatively for April–February 2025–26, gross FDI inflows rose 18.1% to $88.3 billion (vs. $74.7 billion in the same period a year earlier), while net FDI for the same 11-month period reached $6.3 billion (vs. $1.5 billion the year prior).

Static Topic Bridges

Gross FDI vs. Net FDI — Conceptual Clarity

A critical distinction for UPSC examinations:

Gross FDI = Total fresh equity inflows into India from abroad (includes reinvested earnings and intra-company loans per balance of payments norms; but for DPIIT statistics, it primarily refers to equity inflows)
Net FDI = Gross FDI inflows minus outward FDI (Indian companies investing abroad) minus repatriations/disinvestments (foreign companies taking money out of India)
Repatriation/Disinvestment = Foreign investors withdrawing equity capital or remitting profits — increases when global investors restructure portfolios or exit Indian markets

Data source: DPIIT (Department for Promotion of Industry and Internal Trade) tracks FDI equity inflows
RBI's Balance of Payments (BoP) data tracks net FDI on a broader basis (including reinvested earnings and debt instruments)
Negative net FDI does not mean India has no investment; it indicates outflows temporarily exceeded inflows

Connection to this news: The six-month negative streak in net FDI reflected elevated repatriations — not a collapse of gross inflows. The February 2026 turnaround came from a simultaneous surge in gross inflows and moderation in repatriations.

FDI Policy in India — Regulatory Framework

India's FDI policy is governed under the Foreign Exchange Management Act (FEMA), 1999 and administered by: - DPIIT (Ministry of Commerce): Policy formulation, sector-wise limits, FDI monitoring - RBI: Operational oversight, FEMA compliance, BoP reporting - SEBI: Regulates FDI into listed securities - FIPB (Foreign Investment Promotion Board): Abolished in 2017; approval route now handled by respective sectoral ministries

Automatic Route: FDI allowed up to specified limits without prior government approval (most sectors)
Government Route: Requires prior approval from the concerned ministry (sensitive sectors: defence, multi-brand retail, media)
India permits 100% FDI under automatic route in most manufacturing, infrastructure, and services sectors
Key legislation: FEMA, 1999; Companies Act, 2013; sectoral regulations

Connection to this news: The surge in gross FDI in February 2026 reflects investor confidence in India's relatively liberalized FDI regime — which has progressively moved toward the automatic route across sectors over the past decade.

Top FDI Source Countries and Sectors

India's FDI geography is heavily influenced by treaty shopping through low-tax jurisdictions:

Key Details (FY 2025–26, April–September 2025): - Top source countries: Singapore ($11.94 billion), USA ($6.2 billion), Mauritius ($3.47 billion) - Cumulative inflows since April 2000: Singapore leads ($186.82 billion), followed by Mauritius ($183.66 billion), USA ($77.27 billion) - Top sectors (April–September 2025): Computer Software & Hardware (~$9 billion), Services (~$5 billion), Trading (~$2.78 billion) - For FY 2024–25 full year: Services sector led with 19% share (up 40.77% YoY to $9.35 billion), followed by Computer Software & Hardware (16%), Trading (8%) - India's total FDI inflow in FY 2024–25: $81.04 billion (record high) - Inflows from the USA more than doubled to $6.62 billion in April–September 2025 vs. the same period a year earlier

Connection to this news: The February 2026 surge in gross FDI aligns with the broader upward trend in FDI inflows, with technology, services, and manufacturing continuing to attract strong interest.

India as a Global FDI Destination — Structural Factors

India's FDI attractiveness is driven by several structural factors: - Demographic dividend: World's largest working-age population - Production-Linked Incentive (PLI) schemes: Launched 2020–21 across 14 sectors; total outlay ~₹1.97 lakh crore; designed to attract manufacturing FDI in semiconductors, pharmaceuticals, electronics, specialty chemicals - China+1 strategy: Global supply chain diversification shifting some production from China to India - Digital infrastructure: UPI, Aadhaar, DPDP Act 2023 framework building investor confidence in digital sector

India rose to 3rd largest FDI recipient globally in recent years (UNCTAD World Investment Reports)
Make in India (launched September 2014): overarching framework for manufacturing FDI
National Infrastructure Pipeline (NIP): $1.5 trillion infra investment plan (2020–2025) — FDI in infrastructure encouraged via InvITs and REITs

Connection to this news: The 45-month high in net FDI and the strong gross FDI numbers validate the structural investment thesis for India, even as global uncertainty from the West Asia crisis weighs on sentiment.

Key Facts & Data

Net FDI, February 2026: $4.6 billion (45-month high, highest since May 2022)
Net FDI, February 2025: Negative $703 million
Gross FDI equity, February 2026: ~$9 billion (61.6% YoY growth, 7-month high)
Net FDI, April–February 2025–26: $6.3 billion (vs. $1.5 billion a year earlier)
Gross FDI, April–February 2025–26: $88.3 billion (18.1% growth vs. $74.7 billion prior year)
Duration of negative net FDI streak: 6 consecutive months (August 2025 – January 2026)
Top FDI source (FY 2025–26): Singapore ($11.94 billion in H1)
FDI data nodal agency: DPIIT (Department for Promotion of Industry and Internal Trade)
Governing law: FEMA, 1999; RBI administers operational compliance
India's total FDI in FY 2024–25: $81.04 billion (record)
PLI schemes operational across 14 sectors with ~₹1.97 lakh crore outlay