India’s finance minister calls capital outflows a 2027 risk — CNBC

India’s Finance Minister Nirmala Sitharaman said in Bangkok, Thailand, that sustained capital outflows are among the biggest risks to the Indian economy in 2027. According to her, excess liquidity in the stock market and the ability to easily sell assets contributed to weaker performance by Indian stocks.

Index decline and stock sales

In an interview with CNBC on the sidelines of the annual meetings of the IMF and the World Bank, Sitharaman said that the fundamentals of the Indian economy remain sound. At the same time, India’s key stock indices have lost nearly 12% since the start of the year, according to LSEG data, despite the country’s resilient economic growth amid trade uncertainty and geopolitical shocks.

According to India’s depository company NSDL, foreign portfolio investors have sold more than $33 billion worth of Indian stocks since the start of the year. At the same time, domestic capital continues to flow into the market: Indian equity mutual funds have recorded net inflows every month since March 2021.

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Investor exits and AI

Sitharaman noted that multinational corporations, private equity funds and foreign investors may have partially or fully exited their investments at a premium. According to EY estimates, Indian initial public offerings collectively raised $60.4 billion in 2021–2025. Of this amount, $37.7 billion, or 63%, went to existing shareholders who sold securities to public investors.

The minister also called capital flows to the United States and the artificial intelligence sector a problem. At the same time, she said India would not be affected by potential consequences of a collapse in the global AI bubble, as the country had not received the same volume of investment in the sector as other jurisdictions. She added that India is investing in establishing semiconductor manufacturing.