A reassuring vision for India’s capital market

Tuhin Kanta Pandey delivered a compelling speech that blended confidence in India’s financial growth with a realistic assessment of upcoming challenges.

In his first public speech as SEBI Chairman, Tuhin Kanta Pandey articulated a clear vision for India’s evolving financial markets, focusing on economic resilience, capital market growth, regulatory priorities, and the influence of technology.

His address functioned as a declaration of continuity and a deeper reflection on the structural shifts that have transformed India’s financial ecosystem over the past decade. These changes establish a foundation for further advancements. With a background rich in public policy and finance, his insights held importance, offering a glimpse into how SEBI may evolve under his leadership.

India’s macro context is promising

A central theme of his address was India’s strong economic positioning and its long-term aspirations for financial market growth, along with how it will support those goals. With a stable macroeconomic foundation that includes low external public debt, robust foreign exchange reserves, and a well-capitalized banking system, India is projected to maintain a 6.5 percent GDP growth rate throughout the decade.

He emphasized that this growth must be backed by a deep and liquid capital market that facilitates efficient fundraising, provides diverse investment opportunities, and encourages broader market participation. The numbers vividly illustrate this transformation: India’s equity market participation has grown exponentially, with individual investors rising from 49 million in 2020 to 136 million in 2025, while mutual fund investors have more than doubled to 53 million. This rapid expansion suggests a significant shift in how Indian households interact with financial markets, but it also raises crucial questions about financial literacy, risk awareness, and investor protection.

Beyond participation, the SEBI Chair emphasized India’s significant capital-raising momentum, showcasing the increasing confidence in the market. Over the past decade, companies have raised Rs 2.2 trillion annually through equity issuance, with this fiscal year alone seeing Rs  trillion in capital mobilization—double that of the decadal average. The growing acceptance of REITs, INVITs, and municipal bonds signals a shift from traditional bank-led financing to a more market-driven approach. While this diversification is beneficial, it also necessitates stronger risk management frameworks and regulatory oversight to ensure sustainable market growth.

Tilt towards “optimum regulation”

Addressing the regulatory landscape, he was clear that big-bang reforms were not always necessary. Instead, a combination of incremental and structural changes will shape SEBI’s approach. He emphasized "optimum regulation over maximum regulation," suggesting a shift towards simplifying and rationalizing outdated policies while maintaining market integrity. His focus on leveraging technology for efficiency and transparency hints at potential advancements in regulatory oversight, algorithmic trading frameworks, and data-driven market surveillance.

Foreign Portfolio Investors (FPIs), a crucial driver of liquidity in Indian markets, also featured in his address. While acknowledging the stabilizing role of domestic institutional investors, Mr. Pandey reiterated that FPIs remain central to India’s growth trajectory. However, given the volatility in FPI flows due to global macroeconomic shifts, there is a growing need to build a more stable and predictable framework for foreign capital participation. Whether SEBI will introduce measures to attract long-term foreign investors while mitigating short-term speculative flows remains an open question.

Trust engenders stability

One of the most striking aspects of his address was the emphasis on trust and transparency as the foundation of market stability. He acknowledged that SEBI must uphold the highest governance standards, including measures to disclose and mitigate conflicts of interest at the board level. This indicates a renewed focus on regulatory accountability, ensuring that investor confidence in SEBI remains robust.

As Pandey takes charge, several critical questions arise. Will SEBI implement new foreign investment policies to balance domestic and global capital flows while addressing flow volatility? How will emerging financial instruments like REITs, INVITs, and digital securities be regulated and scaled, critical to sustaining India’s growth story? Can SEBI effectively balance financial innovation with investor protection?

Pandey delivered a compelling speech that blended confidence in India’s financial growth with a realistic assessment of upcoming challenges. His tenure is expected to focus on enhancing market participation, increasing regulatory transparency, and fostering a more efficient, technology-driven financial ecosystem. Rather than advocating for disruptive changes, he stresses steady, data-driven reforms. The effectiveness of transforming these concepts into actionable policies will ultimately determine the trajectory of India’s financial market growth in the coming years.