Russian investment in India grows 3-fold even as overall FDI inflow dips in 2024-25

Overall foreign direct investment (FDI) inflows in India witnessed a decline in Financial Year 2025 (April-December), according to data presented in the lower house of the Indian Parliament, Lok Sabha. A total of $62.48 billion in FDI came to India in the last nine months of 2024, compared to $71.27 billion in FY24 and $71.35 billion in FY23.

However, despite a cautious approach taken by foreign investors, Russia has emerged as a bright spot regarding FDI inflows in India. In FY25, Russian investors parked $18.45 million in India, a rise of more than 300 per cent when compared to $5.16 million in FY24.

The trend shows deepening economic relations between the two economies.

Total Foreign Direct Investment (FDI) inflows include equity inflows, equity capital of unincorporated bodies, reinvested earnings, and other capital contributions.

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Foreign Portfolio Investment (FPI) sees massive fluctuations

Meanwhile, Foreign Portfolio Investment (FPI) has seen major fluctuations over the past few financial years.

In FY24, a net inflow of $41.04 billion was registered. However, in FY25 (data available until March 5), a net outflow of $1.68 billion was recorded.

Government implements policy reforms

The Government of India has taken measures over the past years to attract more FDI, including setting up a liberalised investment framework, allowing 100% FDI under the automatic route in most sectors.

Over the years, significant policy reforms have been implemented in sectors like defence, telecom, e-commerce, civil aviation, pharmaceuticals, insurance, digital media, and coal mining to boost investor confidence. The FDI policy is continuously reviewed to keep India attractive for global investors.

For FPI, the government has introduced major reforms to simplify processes and encourage greater participation.

Some of the steps taken by the government are listed below:

2. Simplified onboarding and registration procedures for FPIs.

3. Approval for FPIs to trade in Exchange-Traded Commodity Derivatives (ETCDs) in India.

4. Expanded participation for Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and Resident Indians in SEBI-registered FPIs based in India’s International Financial Services Centres (IFSCs).

5. Reclassification framework, allowing FPI investments to be converted into FDI under specific conditions.