Synopsis
Foreign investors are poised to re-enter the Indian market, seeking robust net returns amid transformative reforms. The government's initiatives and recent financial policies have positioned India as a resilient player in the global economy. Experts suggest that despite macroeconomic challenges, the investment landscape remains promising.Key Takeaways
- Foreign investors are ready to invest in India.
- Transformative reforms are enhancing the financial sector.
- India is positioned as a leading emerging economy.
- Government measures aim to stimulate investments.
- Insurance sector liberalization invites foreign participation.
New Delhi, Feb 8 (NationPress) The community of foreign investors is gearing up to actively invest in the Indian stock market, aiming for strong, effective net returns in the long term, as per experts on Saturday.
With significant and transformative reforms aimed at strengthening the financial services sector, promoting inclusivity, and increasing foreign participation, the government has clearly outlined the trajectory for its vision of ‘Viksit Bharat’.
“While foreign portfolio investment (FPI) inflows have not fully rebounded, the recent announcements in the Budget followed by the Central Bank’s policies this week have positioned India once again as a leader among the world’s fastest-growing economies,” stated Manoj Purohit, Partner and Leader, FS Tax, Tax and Regulatory Services, BDO India.
In spite of macroeconomic challenges such as the potential for new tariffs and trade restrictions from the recently elected US government under Donald Trump, rising inflation risks, currency devaluation, and the specter of trade wars, India remains well-positioned, bolstered by strong measures and timely interest rate cuts by the RBI aimed at stimulating domestic investment and consumption, thereby maintaining market stability.
“The government has echoed these sentiments by simplifying the tax regime, addressing taxation anomalies, and extending multiple tax holidays in the IFSC Gift City for an additional five years to keep the avenues open for investments,” Purohit noted.
Welcoming 100 percent FDI in insurance will enhance the developing insurance market, leading to increased penetration, a competitive policy framework, and the adoption of global best practices through the entry of prominent offshore players.
By prioritizing technology, youth skill development, and infrastructure for capital expenditure, the government’s intentions are clearly aimed at establishing India as an autonomous nation with a sustainable growth trajectory.
In January, foreign institutional investors (FIIs) divested stocks worth ₹72,300 crore, continuing their selling trend after a brief pause in December (which saw inflows of ₹11,000 crore). FIIs were net sellers for 22 of the 23 trading days in January.
“The FII shareholding in Indian equities stood at 16.0 percent as of January, a figure consistent with that observed in October,” according to a report by JM Financial Institutional Securities.
Purohit emphasized that despite the volatile and unpredictable nature of market events, India remains firmly grounded, with the government taking all the necessary measures to prepare for the global economic challenges that lie ahead.
