The government said that FPI withdrawal from Indian equities is not limited to India alone, but is a widespread pattern seen in emerging markets. Minister of State for Finance Pankaj Chaudhary has blamed geopolitical tensions and global factors for this.
New Delhi [भारत]July 27 (ANI): The government on Monday said the recent withdrawal of foreign portfolio investments (FPIs) from Indian equities was part of a broader trend in emerging markets and was “not entirely specific to India”, attributing the movement to a mix of global and domestic factors.
FPI withdrawal is not limited to India only
In a written reply in the Lok Sabha, Minister of State for Finance Pankaj Choudhary said, “The recent foreign portfolio outflow from Indian equities is part of a broader pattern observed in emerging markets and is not entirely specific to India.” He said the changes in FPI investments were “driven by a mix of domestic and global factors, such as geopolitical tensions, uncertainty over trade tariffs, global investor sentiments, currency movements and portfolio rebalancing by global funds in emerging markets.”
what do the statistics say
According to data cited in the reply from National Securities Depository Limited (NSDL), FPIs were net sellers of Rs 1,52,691.04 crore during 2025-26, while there was a net inflow of Rs 20,019.66 crore in 2024-25 and Rs 3,39,064.57 crore in 2023-24.
Domestic investors remain confident
“Despite FPI outflows, overall investor sentiment remains intact, as reflected by the strong holdings of domestic institutional investors (DIIs), especially mutual funds, in listed Indian companies,” the minister said. The response also said that FPIs have “consistently shown confidence in the Indian stock market over the years”, with gross purchases increasing from Rs 23,87,375.71 crore in 2021-22 to Rs 44,64,817.84 crore in 2025-26.
impact on rupee
On the impact of foreign fund outflows on the rupee, the government said exchange rate movements are influenced by a number of domestic and global factors including the dollar index, capital inflows, interest rates, crude oil prices and current account deficit.
The foundation of the economy remains strong
The government further said that India’s macroeconomic fundamentals remain strong, noting that real GDP has grown at over 7 per cent during the last three years. She said economic growth continues to be supported by “strong domestic demand, healthy corporate balance sheets and prudent fiscal management”, while high-frequency indicators for the first quarter of 2026-27 point to a sustained pickup in economic activity.
Impact on retail investors
Responding to concerns about the impact on retail investors, the government said profits and losses vary depending on individual investment profiles and broader market conditions, including geopolitical developments and investor perception about risk and reward.
Steps taken to make investment easier
The response 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 investment for foreign portfolio investors, including regulatory simplification, higher investment limits for certain foreign investors, operational reforms and dedicated investor outreach initiatives. (ANI)
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