Why the world's biggest sovereign funds are eyeing India

SYNOPSIS

Global sovereign wealth funds are redirecting capital toward India’s economy. This blog explores the drivers from demographics to infrastructure reforms that make India a magnet for long-term investors.

A landmark investment set to enhance trade, technology, and talent exchange between Japan and India.

Rationalization for investment by sovereign funds:

Investment by sovereign funds during 2020-21 to 2024-25 surged to ₹16,228 crore and sovereign funds added to their holding in capital goods with investments at ₹3,626 crore.

• Systematic Expansion

Most big economies are slowing down. India is different; its economy is growing strong and on track to expand by a healthy 6.5% this year. When things are uncertain everywhere else, this steady growth is a rare and attractive opportunity. For giant investment funds that plan for the long term, India's reliable performance is what they need.

• Supportive Government Policies

The Government's Make in India initiative with Production-Linked Incentive schemes is transforming the country into a manufacturing hub to rival all others globally. The Digital India program is working towards a digitally empowered economy with increased internet infrastructure and wider coverage.

• A Convenient Location for Business Transactions

India is a marketplace for close to 4 billion customers and interlinks supply chains all through South Asia, Middle East and Africa. India is located for its huge customer base and for supply chain corridors and sourcing centres.

• Updated Rules, New Opportunities

The Indian government has continued to make the environment more investor friendly. These reforms make access norms for foreign portfolio investors straightforward in all sectors to open 100% under the automatic route.

• The Shift to Green Energy Sources

India targets 500 GW renewable capacity by 2030. The ESG sovereign funds investments in solar, wind, and green hydrogen are aligned with the fund's climate goals.

Infrastructure Push The National Infrastructure Pipeline (₹111 lakh crore project) is generating opportunities in roads, airports, and power. Sovereign funds such as GIC and ADIA are investing in infrastructure platforms and immovable assets.

Tech Develop India’s digital transformation has revolutionized business operations. With over 954.4 million internet users, India is the world’s second-largest online market. The adoption of the Unified Payments Interface (UPI) is marking a digital payment revolution, asserting the nation’s adoption of technology.

These are some of the world's top investment firms backing the India story: 

• Temasek Holdings State owned investment firm of Singapore has made investment in India worth over 8% of its global portfolio indicating its confidence in its prospects for growth. Its portfolio includes investments spread over all segments from Haldiram's to Mahindra Electric to Ola Electric to Lenskart.

• Softbank Group The Japanese business community has formed one of the broadest portfolios in India with equity interests in more than 30 companies extended over the technology and consumer segments. Prominent investments include OYO, Swiggy, Meesho, and FirstCry.

• Mubadala Investment Company Abu Dhabi sovereign wealth fund has spent over USD 4 billion investing in India, shoring up its presence in sectors vital to its economic foundation. Its portfolio in India comprises Reliance Jio, Tata Renewables, Manipal Health Enterprises, etc.

Conclusion

The continued interest by large SWF's is a strong endorsement of India's economic prospects. As it gets further along its trajectory towards development, this capital inflow is set to pick up speed and will play an indispensable role towards funding its plans for development.

Mann Chawda