Mediaeye News
New Delhi: Foreign Portfolio Investment (FPI) inflows into India are expected to rebound in FY27 after net outflows of $16 billion in FY26, reflecting improved investor sentiment and market conditions, according to a report on Monday.
The net Foreign Direct investment (FDI) is expected to rise from $7 billion in FY26 to $15 billion in FY27, supported by healthy growth in gross inflows and an expected moderation in growth of repatriation outflows, the report from CareEdge Ratings said.
Gross foreign direct investment (FDI) rose 18 per cent year‑on‑year in FY26 to $94.8 billion, and the momentum continued into FY27, with April gross inflows up 65 per cent to $15.3 billion.
The growth in repatriation outflows, which have in recent years offset gross inflows, has steadily moderated over the past two years, from 51.6 per cent in FY24 and 15.8 per cent in FY25 to 5 per cent in FY26.
Rajani Sinha, Chief Economist, CareEdge Ratings, said that India’s capital account seems to be turning a corner after ending FY26 on a sombre note.
“Healthy growth in gross FDI inflows accompanied by a moderation in repatriation growth is expected and supported by policy measures and is expected to increase from $7 billion in FY26 to $15 billion in FY27,” Sinha added.
Recent policy measures by the government and the RBI should help attract sizeable inflows of $45-60 billion from FCNR(B), ECBs and OFCBs, it said.
The tax-related measures for FPIs investing in G-secs, combined with lower Indian equity valuations and the prospective inclusion of India’s G-secs on the Bloomberg Global Aggregate Index, are likely to incentivise healthy FPI inflows.
“Factoring these dynamics with our projections of the CAD, we expect India’s BoP to turn positive in FY27 after two consecutive years of deficit. However, the RBI’s unwinding of its large forward book will cap any sharp appreciation in the currency,” he said.
The firm maintained its stance on the strengthening of the rupee but marginally revised its projection and expects the rupee to average 93-94/USD in FY27.
More Business News on www.mediaeyenews.com
—IANS
