Daijiworld Media Network - Washington
Washington, Nov 5: India received $150.7 billion in remittances in 2025, more than four times the Foreign Direct Investment (FDI) recorded during the year, highlighting the growing importance of overseas transfers to developing economies, according to a World Bank report.
The International Debt Report 2026 put India's FDI at $35 billion in 2025, while the country recorded a net portfolio equity outflow of $18.5 billion. Remittance receipts were around 4.3 times the FDI figure.
The Washington-based lender identified India as a major contributor to remittance growth among countries borrowing from the International Bank for Reconstruction and Development (IBRD), the World Bank's lending arm for middle-income and creditworthy lower-income countries.
India's remittance receipts were more than twice those of Mexico, which received $65.1 billion and ranked second among IBRD borrowers, the report said.
India accounted for around 73 per cent of the $207.6 billion in remittances received by South Asia in 2025, according to calculations based on the report's figures. The bank identified India and Mexico as key drivers of remittance flows to their respective regions. Latin America and the Caribbean received $164.1 billion during the year, making it the second-largest regional recipient after South Asia.
The findings form part of the World Bank's annual assessment of external debt and financial flows. The figures provide an assessment of developments during 2025 and do not represent remittances received in 2026.
Across low- and middle-income countries, excluding China, remittances reached $687.1 billion in 2025, compared with $333.5 billion in FDI.
The gap between the two sources of external finance has widened considerably since 2011, when remittances and FDI stood at $313.3 billion and $316.6 billion, respectively.
By 2025, remittances had more than doubled, while FDI had increased by just 5.3 per cent over the same period, the report said.
The World Bank cautioned that the two sources of external finance serve different purposes and cannot be treated as interchangeable. Remittances primarily provide income to households and help stabilise consumption and foreign exchange receipts. FDI, on the other hand, can strengthen productive capacity, generate employment and facilitate technology transfer.
The growing contribution of remittances, therefore, does not replace the longer-term productive investment associated with FDI, the report noted.
Despite the widening gap, India remained among the major destinations for foreign direct investment in developing economies. Brazil, India, Indonesia, Mexico and Vietnam together accounted for 52.7 per cent of the FDI received by low- and middle-income countries, excluding China, in 2025.
The report also put India's total external debt at $763.5 billion at the end of 2025, registering an increase of 6.4 per cent from the previous year.
According to the country profile, India's external debt comprised $275.6 billion in public and publicly guaranteed debt, $337.2 billion in private nonguaranteed debt and $150.8 billion in short-term debt. The overall figure covers both public and private obligations and does not represent government borrowing alone.
Personal remittances, as defined in the report, include personal transfers and compensation of employees. They constitute a separate category of cross-border financial flows from FDI, portfolio equity investment and external borrowing.