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RBI reports stronger foreign investment, resilient India trade
Exports and imports maintained strong momentum in the first quarter.
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Ankita Baidya - Sat, 25, Jul 2026
- 06:27 EDT
- 13
Reserve Bank of India / File Photo
India's external trade maintained strong momentum in the first quarter of the 2026-27 financial year, while foreign investment inflows recovered in recent months, reflecting renewed confidence in the economy, according to the Reserve Bank of India's July Bulletin.
"The momentum of external trade sustained as reflected in high growth in exports and imports in Q1:2026-27," the Reserve Bank said in its "State of the Economy" article, published in the July Bulletin.
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The central bank said the recent operationalisation of the India-UK Comprehensive Economic and Trade Agreement (CETA) is expected to strengthen India's trade outlook further. The agreement comes as economic ties between the two countries continue to expand through trade and investment.
The Bulletin said India's external sector remained resilient, with key external vulnerability indicators staying within comfortable levels despite global uncertainties.
According to the RBI, foreign investment inflows have also improved in recent months. Foreign Portfolio Investors (FPIs) invested US$3.1 billion in Indian equity and debt markets through July 20, while foreign direct investment (FDI) during April and May remained higher than in the corresponding period a year earlier.
Net FDI during April-May rose to US$6.5 billion from US$2.47 billion during the same period last year. The increase was supported by strong inflows in April before net FDI turned marginally negative in May, when gross inflows declined from more than US$15 billion in April to about US$6 billion.
The RBI said foreign portfolio inflows in June were supported by policy measures for the debt market and easing geopolitical tensions. Japan, Singapore and Mauritius accounted for about 74 percent of total equity inflows during the period.
Financial services attracted the largest share of equity investments, followed by manufacturing, wholesale and retail trade, and computer services, according to the Bulletin.
The central bank also reported continued overseas investment by Indian businesses. Around 74 percent of India's outward FDI during April and May was directed to the United States, the Cayman Islands and the Netherlands, highlighting the importance of these destinations for Indian companies expanding abroad.
Separately, the Bulletin noted that headline retail inflation rose to 4.4 percent in June, the highest level in 18 months and the first time inflation exceeded the RBI's target since January 2025.
The RBI publishes its Bulletin every month, featuring economic analysis, speeches and statistical data. It noted that the views expressed in the "State of the Economy" article are those of the authors and do not necessarily represent the official position of the Reserve Bank of India.
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