Amidst pressure on the rupee and India’s foreign exchange reserves, the latest data from the Reserve Bank of India (RBI) shows that the total amount of money that left the country in March 2026 exceeded inflows by $11.7 billion. This was the first month after the start of the West Asia crisis.

The overall outflow was driven by the exodus of foreign portfolio investors, which overshadowed the fact that net foreign direct investment (FDI) was positive for the second consecutive month. 

That is, while net FDI was $1.6 billion in March 2026, net foreign portfolio inflows stood at -$13.3 billion. Typically, direct investment involves money flowing into growth-generating assets, while portfolio investment refers to money flowing into short- to medium-term stock holdings.

According to the RBI, the outflow of portfolio investments continued in April and May.

The outflow of dollars from the country has simultaneously eaten into the RBI’s foreign exchange reserves and has led to the depreciation of the rupee.

Positive direct flows

Over the full financial year 2025-26, net FDI stood at $7.6 billion, nearly 700% higher than in 2024-25. This occurred despite six out of the twelve months experiencing more direct investment flowing out than in.

“During 2025-26, both gross and net FDI inflows were higher than the previous year,” the RBI said in its monthly bulletin for April 2026. “In March, net FDI remained positive for the second consecutive month, despite a deceleration in gross FDI, on account of relatively low repatriation and outward FDI.” 

Gross FDI in March 2026, or the total amount of direct investment entering the country that month, stood at $6.2 billion, nearly 31% lower than in February. However, this figure was 6% higher than in March of last year.

On the other hand, total outflows inched up to $4.7 billion in March 2026 from $4.5 billion in the previous month. This figure was 27% lower than in March 2025.

Within the outflows, both repatriation by foreign companies operating in India and outward direct investment by Indian companies decreased as compared to the previous year. 

That is, the quantum of money repatriated and disinvested in March 2026 stood at $2.3 billion, down 40% over March last year, while outward FDI by Indian companies stood at $4.7 billion, down by 27%.

Portfolio investors leave

The data, however, showed that while net FDI was positive in March 2026, net foreign portfolio investments were significantly negative. That is, foreign portfolio investors (FPIs) took out $13.3 billion more from the Indian markets than they invested. 

This situation, the RBI said, continued into April and also in May. 

 “In April and May so far (up to the 20th), FPIs remained net sellers, particularly in the equity segment, amidst persistent geopolitical uncertainty and continued tensions in West Asia,” the RBI said.