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The government on Monday said the recent withdrawal of foreign portfolio investments (FPIs) from Indian equities was part of a broader trend across emerging markets and was "not altogether specific to India," attributing the movement to a mix of global and domestic factors.
In a written reply in the Lok Sabha, Minister of State for Finance Pankaj Chaudhary said, "The recent foreign portfolio outflows from Indian equities are part of a broader pattern noticed in emerging markets and not altogether specific to India." He added that changes in FPI investments have been driven by "a mix of domestic and global factors such as geopolitical tensions, uncertainties surrounding trade tariffs, global investor sentiments, currency movements and portfolio rebalancing by global funds across emerging markets." According to data cited in the reply from the National Securities Depository Limited (NSDL), FPIs were net sellers of Rs 1,52,691.04 crore during 2025-26, compared with net inflows of Rs 20,019.66 crore in 2024-25 and Rs 3,39,064.57 crore in 2023-24. "Despite FPI outflows, overall investor sentiment remains intact, as evidenced by the holdings of domestic institutional investors (DIIs), particularly mutual funds, in listed Indian companies," the minister said. The reply also noted that FPIs have "shown confidence in the Indian stock market consistently over the years," with gross purchases rising from Rs 23,87,375.71 crore in 2021-22 to Rs 44,64,817.84 crore in 2025-26. On the impact of foreign fund withdrawals on the rupee, the government said exchange rate movements are influenced by several domestic and global factors, including the Dollar Index, capital flows, interest rates, crude oil prices and the current account deficit. The government further noted that India's macroeconomic fundamentals remain strong, noting that real GDP has grown at over 7 per cent during the past three years. It added that economic growth continues to be supported by "robust domestic demand, healthy corporate balance sheets and prudent fiscal management," while high-frequency indicators for the first quarter of 2026-27 point to sustained momentum in economic activity. Responding to concerns about the impact on retail investors, the government said gains and losses vary depending on individual investment profiles and broader market conditions, including geopolitical developments and investor perception of risk and reward. The reply also listed a series of measures taken by the government, the Reserve Bank of India and the Securities and Exchange Board of India to improve the ease of investing for foreign portfolio investors, including regulatory simplification, higher investment limits for certain overseas investors, operational reforms and dedicated investor outreach initiatives. (ANI)
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