India FDI inflows rise 13% to $90.8bn in 2026

Gross FDI picks up on a trailing basis

Gross foreign direct investment (FDI) equity flows into India rose to $10.8 billion in January 2026 on a 12-month trailing basis, according to a Morgan Stanley report. The report pegged this at 2.3% of GDP, marking a faster pace than the year-ago period. In January 2025, gross FDI stood at $10.3 billion, or 2.1% of GDP. Morgan Stanley said the January 2026 figure represents a 13% year-on-year increase. The data point matters because it captures the pace of fresh equity capital entering the economy over a full rolling year. It also offers a cleaner view than single-month numbers, which can be volatile. The report framed the move as an acceleration in gross flows rather than a broad-based improvement in net FDI.

Net FDI remains the weak spot: repatriation and outward flows

Morgan Stanley’s outlook on India’s FDI was described as mixed. The bank expects gross inflows to stay strong, but flagged that net FDI may remain weak. The reason is a rise in repatriation by foreign investors and an increase in outward investments. This distinction is central for investors tracking the balance-of-payments impact of capital flows. Even when gross inflows are healthy, higher repatriation can reduce the net support to external financing. Outward investments by Indian entities can also pull down the net number. The report did not quantify repatriation in the excerpt, but it highlighted the trend as a constraint. In parallel, another data point in the same set of updates showed improving gross inflows when repatriation is excluded.

FDI excluding repatriation hits a three-year high

Morgan Stanley reported that gross FDI excluding repatriation improved to a three-year high of $16.3 billion. The report said this measure grew 38.4% year-on-year. This metric is often used to gauge the “freshness” of foreign capital entering the country, stripping out the effect of existing investors taking money home. The jump suggests that the pipeline for new equity deployment has strengthened compared with the same period last year. It also implies that underlying investor interest remained firm even if net FDI is pressured by profit-taking and capital recycling. The bank’s framing indicates that the weakness is more about the net arithmetic than a collapse in gross investor appetite. For markets, this can influence how capital flow narratives are interpreted.

Greenfield and brownfield investments: what is driving the pipeline

The report described India’s current gross FDI pipeline as balanced between greenfield and brownfield activity. It said greenfield projects are primarily coming in IT and banking. Brownfield flows were described as higher foreign stakes in existing Indian ventures, joint ventures, and mergers and acquisitions, particularly across the financial sector and startups. This mix matters because greenfield FDI tends to create new capacity, while brownfield routes are more about ownership changes, consolidation, or scaling existing platforms. Morgan Stanley’s characterisation suggests that India is seeing both new build-outs and deal-led capital. It also ties into broader financial-services reform and consolidation trends discussed in the wider context.

Sector trends: services still lead, manufacturing broadens

Sector-wise, Morgan Stanley said the services sector continued to dominate FDI flows, accounting for 46% of the share. The report also noted that manufacturing contributes about one-quarter of total flows and has diversified into segments such as automobiles and electronics, supported by policy impetus. In a separate FY2024-25 breakdown cited in the same material, the services sector accounted for 19% of total equity inflows, followed by computer software and hardware (16%) and trading (8%). The services sector’s reported inflow in FY2024-25 was $1.35 billion, up 40.77% from $1.64 billion in the previous year. Manufacturing FDI in FY2024-25 was reported at $19.04 billion, up 18% from $16.12 billion.

FY2024-25: record inflows and where the money came from

The Ministry of Commerce and Industry data cited in the material reported India received $11.04 billion (provisional) in FDI inflows in FY2024-25. The same data set described this as a 14% increase from $11.28 billion in the previous year. On the state distribution of equity inflows for FY2024-25, Maharashtra led with 39%, followed by Karnataka (13%) and Delhi (12%). On source countries, Singapore was cited as the top contributor with 30%, followed by Mauritius (17%) and the United States (11%). These shares are important for tracking both geographic concentration and the policy and treaty backdrop that often shapes routing of investments.

Global context: India gains share even as Asia slows

Globally, FDI flows were reported at $1.6 trillion in 2025, up 14% year-on-year. But flows to Asia were reported to have declined to $114 billion, down 2.5%. Against this backdrop, the Morgan Stanley data said flows to India, excluding repatriation, rose 44% year-on-year. The report added that India’s global market share improved to a three-year high of 2.4%. This combination suggests relative outperformance on select measures even when the regional pool is under pressure. For India-focused investors, the relative share gain can be as important as the absolute number because it indicates competitiveness in attracting long-term capital.

Policy and reform backdrop: opening up financial services

The wider context also points to financial-services reforms aimed at drawing long-term capital. A bill was reported as being passed that allows up to 100% foreign ownership of insurance firms, compared with the earlier cap of 74%. The shift was also described as applying to the $177 billion pension fund sector, paving the way for 100% foreign ownership there as well, versus a prior 74% cap. The same context highlighted consolidation as part of the strategy, with the total volume of transactions targeting Indian firms said to have climbed 15% this year to nearly $10 billion, including Japanese participation in large banking deals. Separately, RBI data cited in the material showed India recorded net FDI of $1.6 billion from April to September, more than double the rate a year earlier.

Key figures at a glance

Market Impact

For Indian markets, the split between gross and net FDI is crucial. The Morgan Stanley data points to stronger gross equity inflows, which can support capital formation and long-duration investment narratives, especially when linked to greenfield projects. But the report’s warning on weak net FDI underscores that repatriation and outward investment can dilute the headline benefit in external accounts. Sector leadership by services and diversification within manufacturing aligns with listed themes across financials, IT services, autos, and electronics supply chains, though the data does not map directly to individual stocks. The FY2024-25 state and source-country shares highlight concentration risks and the importance of stable cross-border capital channels.

Analysis: why the numbers matter

The January 2026 trailing gross FDI figure of $10.8 billion signals that India continues to attract large pools of equity capital despite global dispersion in flows. At the same time, the net FDI caveat suggests India is moving into a phase where foreign investors are also actively recycling capital, taking profits, or rebalancing exposure. The “FDI excluding repatriation” measure rising to $16.3 billion strengthens the case that new inflows have improved, even if net remains pressured. The global comparison is also notable: with Asia’s FDI pool shrinking in 2025, India’s share rising to 2.4% indicates relative resilience on the metrics cited by Morgan Stanley. Financial-services liberalisation, including the move toward 100% foreign ownership in insurance and pensions, fits the push to attract patient capital, although actual inflow outcomes will depend on execution and investor appetite.

Conclusion

India’s latest FDI data points show stronger gross equity inflows, led by services and supported by a broader manufacturing mix, while net flows remain constrained by repatriation and outward investment. The next data prints on gross and net FDI, alongside implementation of financial-sector ownership reforms, will be closely tracked for confirmation of the trend.