Foreign investors are betting on India's growth story despite recent sell-off

Vishal Mahadevia, MD, Warburg Pincus said India should attract a ton of foreign global capital, as it is the economy that's poised to grow to become a $10 trillion economy.

Executives of global investment firms said they are positive about investing in India, despite major sell-off by foreign institutional investors (FIIs) from Indian equity markets in recent months. The executives blamed high valuation for the sell-off in equity markets, but emphasised that high consistency of taxation and regulatory policies, investments in infrastructure and labour-intensive manufacturing and improvement in the operating environment may bring foreign investments back.

"Norway has both foreign direct investment (FDI) and foreign portfolio investment (FPI) investments in India, there is no capital retreat from any of these investments," said May-Elin Stener, Ambassador of Norway to India and Sri Lanka, speaking at panel discussion on 'Going Long on India: The foreign investor view" at the Moneycontrol Global Wealth Summit 2025 on Friday said.

Stener said Norway's sovereign wealth fund, which is worth $1.8 trillion, making it the world's largest, has tripled its investments in India in the last five years, and expects the investments from Norway would further grow in the coming years. The potential India-Europe trade agreement will boost the investments,

"I also think that that (investments) will continue with the growth rates that we have seen. India is a democracy. It's a country that Norway has very good relations," Stener said.

Vishal Mahadevia, MD, Warburg Pincus said India should attract a ton of foreign global capital, as it is the economy that's poised to grow to become a $10 trillion economy.

"Sitting outside India and looking at opportunities to invest across in different places now, despite having spent so much time in India and my love for India, I have to say, there are other places to invest. so the opportunity doesn't mean it's destiny," Mahadevia said.

"And therefore, we have to be on our toes, I don't know whether it's tax, I don't know whether it's regulation. But I think if we are welcoming, let's put out the red carpet, because everyone else is. In an uncertain time, everybody wants global capital to flow in and if we do that, I think there's just no question because everyone's looking to India," Mahadevia.

Ankur Gupta, Head, Asia Pacific & Middle East, Brookfield's Real Estate Group, says what matters for an investor is micro rather than macro.

"We look at the macro, but what really matters for an investor is a micro, whether it's a particular company that has a specific company growth plan, whether it's a sector that we like, whether it's a particular theme in the in the context of so many things, so many variables that you make make up a country. And I think we have been very conscious of what is, what is behind the six and a half percent or 7% growth, what is behind the four to 5% inflation," Gupta said.

On investments in infrastructure and real estate, Gupta said, India has a long way to go.

"The ratio to commercial real estate in the US to GDP is almost one is to one, which means investable commercial real estate in the US is about $20 trillion; in India, that number is less than a trillion, maybe, if I'm being generous, half a trillion dollars. If we become a $10 trillion economy, then we'll have to put 20x (investable commercial real estate)," Gupta said.

Florian Neto, Head of Investments Asia, Amundi said, India has an exceptional level of growth in equities in 2023 and 2024, and this has been cyclically coming down last year, partially self-inflicted fiscal consolidation, which was necessary pain the short term to tame inflation.

"So on the valuation side, yes, India is more expensive than most emerging countries. equities, but it's just a price you have to pay for growth," Neto added.

Neto added Indian Rupee has been stable, and India can do better in labour-intensive manufacturing capabilities, taking advantage of the China plus one supply chain de-risking.

Neto said the FII's interest in China is more tactical, to take advantage of the potential rally that the market may offer given the reasonable valuations and improving macros.