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India’s outward foreign direct investment has rebounded strongly since the COVID-19 period, in contrast to the world where outward FDI is contracting, a report said on Tuesday. 

The report from Bank of Baroda said outward FDI climbed sharply to $42 billion in FY25 from $25 billion in FY24 and retained momentum at $47 billion in FY26, underscoring a steep U?shaped recovery since COVID-19 period.

Indian companies are increasingly seeking direct ownership through FDI, and this reflects growing intentions of Indian companies to expand into other countries and leverage the opportunities presented.

The share of the route of investing in a wholly owned subsidiary is also significantly higher, the report said, adding that the equity component of outward FDI has risen to 42 per cent in FY26 from 31 per cent in FY17.

The sector-wise profile shows financial services comprising the major pie of outward FDI, reflecting a preference for knowledge-based IT-related services over the traditional capital-intensive manufacturing sector, said Dipanwita Mazumdar, Economist, Bank of Baroda.

The growing importance of GIFT City is also a major contributor towards the trend and the share of outward FDI in major advanced economies is lower.

Hence, this leaves more potential in the future in the time of new trade and investment agreements, the report noted.

Excluding guarantees, India's outward FDI stood at $28 billion in FY26. The pace of increase in India's FDI has been the sharpest in FY25, where it went up to $42 billion from $25 billion in FY24.

Singapore has the highest share of 30 per cent in India’s outward FDI and the elevated share is consistently maintained since FY17, possibly due to tax rule changes and treaty amendments in 2016.

Other than Singapore, maximum concentration is in the United States, and the destination share to the US rose to 13.6 per cent in FY26 from 9.9 per cent in FY17.