India's foreign investment outlook improving despite global uncertainty: RBI bulletin

India's foreign investment outlook is improving despite heightened global uncertainty, the Reserve Bank of India said on Wednesday, citing stronger foreign direct investment inflows and a rebound in portfolio investments.

In its July Bulletin, the RBI said India's external sector "remains steady with improving outlook, aided by inflows of foreign investments," even as the global economy faces renewed geopolitical tensions and supply chain disruptions.

The central bank said both gross and net foreign direct investment (FDI) were higher during April-May 2026 than a year earlier, while net foreign portfolio investment (FPI) flows turned positive in June and remained positive in July.

The assessment comes at a time when the global economy is grappling with supply chain disruptions and financial market volatility linked to West Asia conflict.

The RBI, however, noted that Indian equity markets became range-bound after the collapse of the West Asia ceasefire in early July, which renewed concerns over global risks.

It said India's key external vulnerability indicators remained well anchored at the end of March 2026, while foreign exchange reserves continued to stay at comfortable levels.

The strengthening of the US dollar, however, led to depreciation in the currencies of several emerging market economies, including India, during July.

“The domestic economy has navigated the external uncertainties well, underpinned by healthy demand conditions and resilient performance of the industrial and services sector,” it said.

The central bank noted that headline retail inflation edged up in June due to food and fuel prices, while underlying core inflation remained subdued.

The RBI cited the International Monetary Fund's July update lowering its 2026 global growth forecast by 10 basis points from its April projection because of the economic impact of the West Asia conflict, partly offset by AI-led investment. It also warned that risks to global growth remained tilted to the downside because of the possibility of renewed conflict, supply chain disruptions and persistent inflationary pressures.