📰Foreign Investors Pulled $18 Billion From India, Creating Opportunity | Daily India Briefing

In 2025, foreign investors pulled $18 billion out of Indian equities as part of a global flight to safety. Today, we explain why 2026 can be different, and why this creates an investing opportunity for you.

If you have any questions about India, fill out this form or reach out to Shreyas at [email protected]

Macro

• There are new anti-dumping orders on low ash met coke imports of $60.87-130.66 (₹5,500-11,800) per tonne. The duty is imposed on Australia, China, Japan, Russia, Indonesia, and Colombia. Met coke is used to steel refinement. 

• ​​Ships carrying Russian oil are going to Reliance's west coast refinery, in a sharp policy reversal. 3 tankers carrying 2.2 million barrels of Urals are the only ones Reliance ordered for January. Reliance in 4Q25 said it was halting imports, but the Russian discount was too large. 

• Coal India is allowing neighboring countries to participate in auctions to ease the coal supply boom.Inventories are 17 percent higher y-o-y but buyers are maligning the high ash content which effectively makes the coal lower quality.

Equities

• Softbank-backed Oyo Hotels is filing for a confidential IPO valuing the firm at $7.5 billion (₹675.8 billion). This is days after the firm raised $742 million (₹66.8 billion) from a fresh, private share issuance.  

• ITC shares have fallen $7 billion (₹630.7 billion) after 12 brokerages downgraded the equity.The government levy has caused a huge loss, especially with Morgan Stanley reporting that ITC will have to raise prices by 40 percent to pass-through taxes. Shares have lost 14 percent in the last 2 days.

Alts

• There are protests on instant-commerce giants promising 10 minutes delivery time which adds to unsafe work conditions. Gig workers will often race across cities to deliver goods on time. New labor laws provide a minimum wage, social security benefits, and a grievance redressal mechanism which should help in the short term. 

• The government pledged $4.6 billion (₹414.5 billion) in funding for private electronics supply chains. There were 22 proposals for local and global firms which should generate $28.6 billion (₹2.6 trillion) in output. The chains include high-value sub-assemblies such as camera and display modules, further phone manufacturing like Apple, and four new fabs from Micron and Tata. 

• Small business owners are increasingly turning to business coaching gurus.Small firms account for 30 percent of GDP and 45 percent of exports but lack training. Most gurus charge something around $10,000 (₹901,000) for a 9-month session to improve profits — comparable to an MBA in India.

Policy

• The government is granting Vodafone Idea a moratorium on its $9.8 billion (₹883 billion) in government penalties until the 2030s. Vodafone misrepresented AGR fees which will be paid back. Some of its outstanding spectrum auction dues could also be converted into government equity; India owns 49 percent of Vodafone’s Indian unit. 

• The Vodafone moratorium also helps curry favor with the UK government.Part of the UK FTA was allowing UK businesses to work more in India. Shielding the commonwealth’s largest local investment from collapse works in that direction.

Invest in India's Tech Wave — The India Internet ETF (INQQ)

Eternal. NYKAA. Groww. Lenskart. Swiggy. Gain exposure to the “new age” technology leaders driving India's rise on the global stage -- all in a single trade. The India Internet ETF (NYSE: INQQ) allows investors to access a basket of innovative companies contributing to the future of the world’s most populous country.

From e-commerce to fintech to travel, the INQQ ETF taps into India’s rapidly expanding digital landscape and seeks to deliver a targeted way to participate in potential long-term growth. Invest with the INQQ ETF.

Click for current holdings and to learn more.

Reach out to [email protected] to reach our audience and see your advertisement here.

Foreign Investors Pulled $18 Billion From India

Foreign investors pulled roughly $17.5 billion (₹1.6 trillion) out of Indian equities in 2025, marking the largest annual exit on record. The selling was also persistent rather than in bursts with FPIs being net sellers in 8 out of the 12 months; net entrants were only recorded in April, May, June, and October. Keep in mind each of those months featured dollar weakness, increased hope of rate cuts, and a lack of a special 50 percent US tariff on India. 

What makes the year more interesting is that FPIs did not completely exit Indian assets, instead they bought about $6.5 billion (₹590.1 billion) of various types of Indian debt. The market had a stronger preference for carry and macro stability over the increased risk in the equity markets. Additionally, the bond market is a better bet on India’s overall macro story rather than taking on increased idiosyncratic risk that stocks bring. 

The split also aligns with trends visible with buying and selling in the bond market. FPIs sold sovereign bonds only later in the year when the rupee weakened and the RBI started reporting that rates would remain flat. That, combined with elevated US bond yields and a strong dollar, has reduced the desire for both American and global investors to shift capital into Indian debt. 

The main story for both debt and equities has been the weak rupee in 2H25. The rupee was the worst performing major EM currency in 2025 and lost 10 percent. It slipped past 91 prior to RBI intervention and still sits precariously at 91. For global investors (particularly those who are dollar and euro-denominated), any local returns are wiped out or turned negative after converting back. India also looks unattractive on a risk-adjusted basis to EMs in Eastern Europe or LatAm with both regions maintaining stronger currencies and higher yields. 

2026 provides a lot more optimism for both debt and equity analysts. Foreign flows would rebound assuming a pickup in nominal growth, stronger earnings delivery, an easing dollar/strengthening rupee, and, most importantly, progress on a US trade deal. The pickup in nominal growth is a macro story based on domestic demand and the signing of more FTAs in Middle-Eastern countries and the EU. Earnings would depend on FTAs but also economic reforms making business easier. The currency depends on the trade deal being signed but a Fed board easing rates would also benefit the rupee.

See you tomorrow.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

Sponsor the next newsletter to reach tens of thousands of U.S.-based business-savvy professionals. Reach out to [email protected].

Could your business use expert insights to power growth in India? Reach out to [email protected] for a free introductory call.

Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.