India Ramps Up Financial Reforms Amid $17 Billion Outflow
India is accelerating key financial sector reforms after foreign investors withdrew nearly $17 billion from Indian equities so far this year — the largest such capital flight among major Asian markets. The outflow, triggered by heightened concerns over U.S. tariffs and tighter global regulation, has prompted a coordinated move by the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI) and the government to loosen longstanding restrictions.
Reform Measures Underway
Recent regulatory changes include faster listing rules for companies, eased limits on overseas borrowing and relaxed conditions for foreign funds and lenders to enter India’s markets. Discussions are also underway to extend reforms over the next six to twelve months, especially focusing on banking and regional investment.
Why It Matters
The exit of foreign money and tallying just $124 million in inflows in 2024 underscores growing investor caution. The reforms seek to restore confidence, expand credit access and align India’s financial regime more closely with global norms. Market observers applaud the direction but warn that structural issues such as taxation, bureaucracy and transparency still need addressing.
Broader Outlook
India’s economy is projected to grow at around 6.8 % in fiscal 2025-26, but sustained momentum will depend on how quickly financial reforms translate into deeper investment and lending. The success of this reform push will be closely watched, as it aims to transform India’s status from capital-starved to capital-attractive.
