Washington: India received $150.7 billion in remittances in 2025, more than four times the Foreign Direct Investment recorded in the country, according to a World Bank report highlighting the growing importance of these transfers to developing economies.
The International Debt Report 2026 put India’s Foreign Direct Investment at $35 billion. It recorded a net portfolio equity outflow of $18.5 billion during the same year. Remittances were about 4.3 times the report’s FDI figure.
The Washington-based lender identified India as a major driver of remittance growth among countries borrowing from the International Bank for Reconstruction and Development, the World Bank’s lending arm serving middle-income and creditworthy lower-income countries.
India’s receipts were more than twice those of Mexico, which received $65.1 billion and was the second-largest remittance recipient among IBRD borrowers, according to the report.
India also accounted for roughly 73 per cent of the $207.6 billion in remittances received by South Asia in 2025, calculations based on the report’s figures show.
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 in 2025, behind South Asia’s total.
The findings form part of the bank’s annual assessment of external debt and financial flows. The report’s release provides a new assessment of developments in 2025; the remittance figures do not describe money received in 2026.
Across low- and middle-income countries excluding China, remittances reached $687.1 billion in 2025, compared with $333.5 billion in Foreign Direct Investment.
The gap has widened considerably since 2011, when the two flows were almost equal. Those economies received $313.3 billion in remittances and $316.6 billion in FDI that year.
By 2025, remittances had more than doubled, while FDI had increased by only 5.3 per cent over the same period, the report said.
The bank cautioned against treating the two sources of external finance as interchangeable. Remittances primarily provide income to households and can help stabilise consumption and foreign exchange receipts. Direct investment can support productive capacity, employment and technology transfer.
The growing contribution of remittances therefore does not replace the longer-term productive investment associated with FDI, it said.
Despite the widening gap, India remained among the major destinations for foreign direct investment in developing economies. Together, Brazil, India, Indonesia, Mexico and Viet Nam accounted for 52.7 per cent of FDI received by low- and middle-income countries excluding China in 2025.
The report separately put India’s total external debt at $763.5 billion at the end of 2025, up 6.4 per cent from 2024.
Its country profile listed $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 therefore covers both public and private obligations, rather than government borrowing alone.
Personal remittances, as used in the report, include personal transfers and compensation of employees. They are a separate category of cross-border financial flows from Foreign Direct Investment, portfolio equity investment and external borrowing.
(IANS)
