Finance Ministry Review: Tariff Risk and Weak Net FDI
Why in the news
The Finance Ministry review cited tariff uncertainty and weak foreign investment as risks.
External risks
- A 90-day pause on the 26% US tariff ends 9 July 2025.
- A US-India trade deal could open export markets.
- US-China tariff pause outcome matters too.
Capital flows
- Prolonged uncertainty may keep FPI flows volatile through FY26 and hold back private investment.
- US Budget Bill and bond reactions are watched after Moody’s downgrade of the US rating.
| FY25 FDI | Value |
|---|---|
| Net inflows | $0.4 billion (profit repatriation, outward FDI) |
| Gross inflows | $81 billion |
| Outward FDI | Up nearly $12.5 billion |
Concern
Indian firms expand abroad but invest cautiously at home.
Exam angle
- Net FDI: $0.4 billion.