India Retains 'Largest Remittance Receiver in World' Crown: Economic Survey

India retained its crown of being the world’s largest recipient of remittances as inflows touched USD 135.4 billion in fiscal year 2025. This outlined a broadly external sector backed by strong exports, highlighted Union Finance and Corporate Affairs Minister Nirmala Sitharaman, while tabling the Economic Survey 2025-26 in the Parliament on Thursday.

According to the Survey, India’s external sector continues to benefit from deeper global integration, reflecting improved competitiveness, greater diversification and an enhanced ability to respond to global demand shifts. While the country’s current account remains characterised by a merchandise trade deficit, this is substantially offset by strong inflows from “invisibles”, particularly services exports and private transfers.

Current Account Deficit Narrows

In the first half of FY26, India’s Current Account Deficit (CAD) narrowed to USD 15 billion, or 0.8 per cent of GDP, compared to USD 25.3 billion, or 1.3 per cent of GDP, in the corresponding period of FY25. The Survey noted that India’s external position is stronger than that of several high-deficit economies, including New Zealand, Brazil, Australia, the United Kingdom and Canada in Q2 FY26.

Remittances

India continued to gain the most remittances, funds sent by the Indian diaspora living abroad (Non-Resident Indians or NRIs) back to individuals or entities within India. They are a crucial part of the Indian economy, representing payments that flow into the country from outside its borders.

The inflows have played a critical role in supporting external sector stability. The Survey observed a rising share of remittances originating from advanced economies, indicating a growing contribution from skilled and professional Indian workers abroad.

Foreign Investments

Despite tighter global financial conditions, India continued to attract substantial investment inflows. Gross investment inflows stood at 18.5 per cent of GDP in FY25. Citing UNCTAD data, the Survey said India remained South Asia’s largest recipient of gross foreign direct investment (FDI) and outpaced major Asian peers such as Indonesia and Vietnam.

Globally, India ranked fourth in Greenfield investment announcements in 2024, with more than 1,000 projects. It also emerged as the leading destination for Greenfield digital investments between 2020 and 2024, attracting USD 114 billion. During April–November 2025, gross FDI inflows rose to USD 64.7 billion, up from USD 55.8 billion in the same period a year earlier, underscoring sustained investor confidence and the strength of India’s digital economy even amid a subdued global environment.

FPI Volatility Due To Global Risks

The Survey highlighted volatility in foreign portfolio investment (FPI) flows, marked by recurring cycles of inflows and outflows driven largely by global financial developments. During the year-to-date period, six months recorded net outflows while three months saw net inflows, resulting in a modest overall balance. However, the quick return of inflows during periods of stress suggests that foreign investors maintain a positive medium-term outlook on India, despite short-term concerns related to elevated equity valuations and global uncertainty.

India’s foreign exchange reserves rose to USD 701.4 billion as of January 16, 2026, from USD 668 billion at the end of March 2025. The reserves are sufficient to cover nearly 11 months of merchandise imports and about 94 per cent of external debt outstanding as of end-September 2025, providing a strong liquidity buffer.

The Indian rupee depreciated by around 5.4 per cent against the US dollar between April 1, 2025 and January 15, 2026. The Survey noted that currency movements are shaped by factors such as domestic savings, external balance, the ability to attract stable FDI, and export competitiveness driven by innovation, productivity and quality.

India’s external debt stood at USD 746 billion at the end of September 2025, up from USD 736.3 billion at the end of March 2025. The external debt-to-GDP ratio was placed at 19.2 per cent, while external liabilities accounted for less than 5 per cent of India’s total debt, significantly limiting external sector risks. As of the end of December 2024, India accounted for just 0.69 per cent of global external debt.

The Economic Survey stressed that strengthening export competitiveness will require a coordinated effort to reduce manufacturing costs. It added that sustained external resilience and greater currency credibility can be achieved by expanding manufacturing export capacity through a disciplined, productivity-focused industrial policy, careful management of input costs across value chains, and continued growth in high-value services.

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