Foreign Investors Withdraw ₹10,355 Crore from Indian Equities in Early April Amid Tariff Concerns
Foreign portfolio investors (FPIs) pulled out a significant ₹10,355 crore from Indian equity markets in the first four trading sessions of April 2025, marking a sharp reversal from the trend observed at the end of March. This outflow comes amid growing concerns over the global economic impact of the United States’ newly announced tariff regime.
Just days earlier, between March 21 and 28, FPIs had infused ₹30,927 crore into Indian equities, helping reduce the net outflow for March to ₹3,973 crore. However, the fresh wave of withdrawals has reignited fears of instability, particularly as it follows the already substantial pullouts of ₹34,574 crore in February and ₹78,027 crore in January.
The primary trigger for this latest round of capital flight is the United States’ decision to impose sweeping import tariffs, including punitive duties on goods from India and other emerging markets. The move has raised concerns among investors about a potential global trade war and its fallout on developing economies.
Analysts suggest that the new tariffs could fuel inflation in the U.S., pushing the economy toward stagflation—a toxic mix of stagnating growth and rising prices. The broader uncertainty has made risk-averse investors more reluctant to maintain or expand their holdings in markets like India, which are seen as particularly vulnerable to global economic disruptions.
In addition to equities, FPIs have withdrawn ₹556 crore from the debt general category and another ₹4,038 crore from the voluntary retention route during the same period, signaling a broader retreat from Indian financial instruments.
With cumulative outflows from Indian equities now reaching ₹1.27 lakh crore for 2025, market watchers remain cautious about future trends. The ongoing geopolitical and trade developments are expected to influence FPI behavior in the months ahead, with Indian markets likely to remain sensitive to global policy shifts and investor sentiment.
