Home / Business and Economy / India's $686B Reserves Face Hidden FDI Drain
India's $686B Reserves Face Hidden FDI Drain
22 Jan
Summary
- India's forex reserves reached $686 billion by early 2026.
- Outward FDI has rapidly increased, impacting reserve accretion.
- Upcoming budget can implement FDI-friendly measures.
As of early 2026, India boasts foreign exchange reserves totaling $686 billion, a significant increase from historical lows and a testament to its economic resilience.
However, recent trends indicate a concerning drain on these reserves due to a sharp rise in outward foreign direct investment (FDI) by Indian entities.
This outflow, coupled with increased FDI repatriation, has disrupted the pattern of reserve accumulation seen in prior years. Historically, India relied on foreign capital inflows to bolster reserves, a strategy now under pressure.
