Net FDI turns positive in Feb 2026 as inflows rise

What changed in February

Net foreign direct investment (FDI) into India turned positive in February 2026 after staying negative for six consecutive months, according to Reserve Bank of India (RBI) data. Net FDI stood at $1.6 billion in February, compared with a negative $103 million in February 2025. The February swing also follows a weak January, when net FDI was negative $1.4 billion. The RBI attributed the turnaround to a combination of higher gross inflows and lower repatriations during the month. The shift matters because net FDI reflects what is retained in the economy after accounting for exits and outward investments.

RBI’s explanation: higher inflows, lower repatriations

The RBI Bulletin flagged two immediate drivers behind the February improvement. First, gross inward FDI rose sharply, indicating stronger headline inflows for the month. Second, repatriations moderated, reducing the drag from profit repatriation and divestment-related outflows. The RBI’s summary for April 2025 to February 2026 also stated that FDI inflows remained higher than the previous year in both gross and net terms. Put together, February became a month where inflows meaningfully outpaced outflows.

Gross inward FDI jumps, repatriations ease

On the inflow side, gross inward FDI rose to $1.98 billion in February, up from $1.56 billion a year earlier. On the outflow side, repatriations were $1.7 billion, down from $1.5 billion in February 2025. This combination directly supports a higher net number, especially when the year-ago base included stronger repatriation outflows. The data points reinforce a key feature of India’s FDI picture in recent periods: gross inflows can remain healthy, but net outcomes depend heavily on exits and outward movements.

Outward FDI slows in February

Another support came from a reduction in outward investments. Net outward FDI declined 31.03% year-on-year to $1.63 billion in February 2026, from $1.77 billion a year earlier. Lower outward FDI reduces the subtraction from net FDI, improving the overall balance. The February data, therefore, shows a month where all three levers moved in the same direction for net outcomes: gross inflows increased, repatriations declined, and outward FDI softened.

Trend for the fiscal year so far: April to February

The RBI’s cumulative data also indicated an improvement through the year-to-date window. Gross FDI inflows increased 18.1% to $18.3 billion during April to February 2025-26, compared with $14.7 billion in the same period a year ago. Over the same period, net FDI inflows rose to $1.3 billion, from $1.5 billion a year earlier. While a single month can be volatile, the April to February numbers suggest that net FDI has improved relative to the previous year, even after months of negative readings.

How this compares with earlier weak net retention

The wider context in the provided data shows that net retention has been an issue even when gross inflows look strong. India’s gross FDI was about $11 billion in FY 2024-25, but net FDI fell to about $1.4 billion after adjusting for exits, repatriation, and outward investment. Net FDI was also described as only about $15 million in May 2025, illustrating how easily net numbers can compress. Against that backdrop, February 2026’s $1.6 billion is notable because it signals a month when net retention strengthened meaningfully.

FPIs: early-February buying after heavy selling

Alongside FDI, foreign portfolio investors (FPIs) showed early signs of improvement in February, based on depository data cited in the report. In the first week of February, FPIs turned net buyers and infused more than ₹8,100 crore into Indian equities, with the dataset also reporting ₹8,129 crore invested (till February 6). This came after sustained withdrawals: FPIs pulled out ₹35,962 crore in January, ₹22,611 crore in December, and ₹3,765 crore in November. Overall, in 2025, FPIs pulled out a net ₹1.66 trillion ($18.9 billion) from Indian equities. The cited drivers for the earlier selling included volatile currency moves, global trade tensions, concerns over potential US tariffs, and stretched equity valuations.

A mixed signal: sentiment improved, but caution remains

The report also noted that the early-February turnaround contrasted with January’s risk-off mood and elevated US bond yields. It highlighted support from improving risk sentiment and an Indo-US trade deal, while also pointing to ongoing overhangs such as higher securities transaction tax (STT) on derivatives and tax-certainty concerns. Another data point in the text stated that FPIs were net sellers of $1.95 billion in January 2026, but turned net buyers in the first week of February with equity buying of about $197 million. It also noted that the week’s equity inflows were largely into the secondary market due to the absence of major IPOs, and that debt inflows in the first week of February were higher than the total inflows seen in the entire month of January. The same section cautioned that one week of buying is not enough to establish a durable trend reversal.

Key data points at a glance

Market impact and why these flows matter

FDI and FPI flows influence market confidence in different ways because they represent different types of capital. February’s net FDI improvement, driven by higher gross inflows and lower repatriations, points to a month of stronger net capital retention. The early-February FPI buying, following a long stretch of outflows, offered short-term support to equity sentiment, though the data presented also stresses that the move was limited to a brief window. The combined picture is that foreign flows showed improvement in February, but the longer-run story still depends on sustained inflows and the pace of repatriation and outward investments.

Conclusion

RBI data showed net FDI turning positive at $1.6 billion in February 2026, helped by a rise in gross inflows to $1.98 billion and a decline in repatriations to $1.7 billion. Year-to-date, gross and net inflows for April to February 2025-26 also improved versus the prior year. FPIs, meanwhile, turned buyers in the first week of February after heavy selling in the preceding months, with ₹8,129 crore invested till February 6 as per the reported depository data. The next key checkpoints will be whether the month-on-month net FDI trend sustains beyond February and whether FPI buying extends beyond the initial early-February window.