Inputs on FPI Progress for the new financial year by Manoj Purohit, BDO India
With the beginning of the new financial year, optimism is high for both India and FPIs on the reviving market, albeit the net inflows are still in red this week.
With a strong economic outlook, policy reforms, and a resilient market, India remains an attractive destination for attracting global capital. The recent reciprocal tariffs imposed by the US administration on Indian goods remain relatively modest as compared to other Asian countries, resulting to continue to give a competitive edge for India. This opens strong proposition to offer viable export opportunities for the country.
India remains one of the fastest-growing economies, with a vast consumer market, skilled workforce, and having a government striving to usher in business-friendly reforms. The government’s continued focus on infrastructure, digital growth, and ease of doing business further boosts investor confidence. The recent move by RBI to keep the existing corporate bond and G-sec limits unchanged for FPIs is a testimony of the government’s intent to keep gateway open for offshore participants to continue infusing funds in India market.
Additionally, trade diversification and strategic partnerships are opening new avenues for investment. While tariffs may pose short-term challenges, India’s sound economic fundamentals ensure that foreign investors will continue to keep India a prime destination for long term investments even in a risk averse situation. The Indian economy currently seems well insulated to survive temporary headwinds on account of macro changes and domestic triggers of high valuation, tight earnings, and rising inflation costs.
Market participants will closely track the long-term impact of the proposed tariffs, upcoming announcements from the RBI’s monetary policy stance amid expectations of a potential rate cut to strategize investment for the upcoming cycle.
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