FDI-backed Firms Strengthen Capital BASE In Fy25, Though Sales And Operating Profit Growth Slow

Foreign direct investment-backed companies in India posted a stronger capital base in 2024-25, with their paid-up capital rising to ₹5,96,425 crore, according to RBI data cited in a recent ANI report. The report said this represented 51.9% of the total paid-up capital of FDI companies covered in the central bank’s annual assessment.

The RBI analysis covered the audited annual accounts of 3,100 non-government, non-financial companies and pointed to a concentration of foreign investment from a handful of major economies. Singapore, the United States and Mauritius together accounted for more than half of the sample companies, while Japan, the Netherlands and the United Kingdom were also identified as key sources of investment.

Operationally, the picture was more mixed. Net sales of these FDI companies grew 8.7% in 2024-25, lower than 9.4% in the previous year. The moderation was sharper in manufacturing, where sales growth eased to 5.1% from 6.8%, while the services sector performed better, with growth inching up to 12.7%.

Profitability at the operating level also came under some pressure. Operating profit growth slowed to 10.7% from 22.1% a year earlier as operating expenses rose 9.1%, up from 7.7%, driven mainly by higher manufacturing costs and increased employee remuneration.

Even so, the bottom line improved. Profit after tax increased 22.2% in 2024-25, supported by higher non-operating income and lower interest expenses. Services companies outpaced manufacturers on this front, with post-tax profit growth of 29.2% compared with 12.6% in manufacturing. The report also said the sample’s debt-to-equity ratio stood at 25.0%, the interest coverage ratio improved to 5.8, and dependence on external funding fell to 42.6% from 45.5%, while the share of gross capital formation in total uses of funds rose to 45.3%.