India's net foreign direct investment (FDI) plummeted to a record low of $353 million in FY 2025, marking a 96.5% decline from the previous year. This sharp drop occurred despite a 14% increase in gross FDI to $81.04 billion, as repatriation, divestments, and increased outward investments by Indian firms surged. Additionally, foreign portfolio investors withdrew 1.38 lakh crore rupees from equities, with debt outflows following the Reserve Bank of India's policy rate cuts. In response, the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) have implemented reforms to streamline foreign portfolio investor registration, ease compliance, and raise investment limits in corporate and government debt markets. However, challenges such as global interest rates, regulatory inconsistencies, and policy uncertainties persist, suggesting that reversing the outflow trend will require broader economic reforms and favorable global conditions.