Nirmala Sitharaman said India's efforts to attract foreign capital will extend beyond bond-market reforms, with the RBI working on additional frameworks.
The government and the central bank are pursuing policy measures aimed at making Indian markets more attractive to global investors.
Motilal Oswal Chairman Ramdeo Agrawal said foreign institutional investors now account for nearly 16% of wealth in India's equity market, with their holdings having expanded four-fold over time.
Bond Market Is 'Not the Final Story': Sitharaman Signals More Reforms to Attract Foreign Investors
The finance minister said the RBI is working on broader market frameworks as India looks to deepen foreign investor participation and strengthen capital market inflows
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Union Finance Minister Nirmala Sitharaman on Monday indicated that India's efforts to attract foreign capital will extend beyond bond-market reforms, saying the Reserve Bank of India is working on additional frameworks to deepen investor participation in domestic markets.
"The government bond market framework is not the final story. The RBI is working towards a broader framework, and we are taking a calibrated approach," Sitharaman said at the MindMine Summit held in New Delhi.
Discussing capital markets, Motilal Oswal Financial Services Chairman Ramdeo Agrawal said India is currently experiencing one of the strongest phases of capitalism in its history.
According to Agrawal, foreign institutional investors (FIIs) now account for nearly 16% of wealth in India's equity market, with their holdings having grown four-fold over time.
Responding to concerns around foreign capital participation, Sitharaman said the government and the Reserve Bank of India (RBI) are working on calibrated policy measures to make Indian markets more attractive to global investors.
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Resilient Domestic Economy
Sitharaman said India's largest domestic market remains its greatest economic strength, while heavy reliance on imports continues to be a key vulnerability amid rising geopolitical uncertainty and supply-side disruptions.
She highlighted the global tensions are exerting pressure on India's import bill through higher commodity prices as well as rising insurance costs.
"The uncertainty is not only raising concerns about imports, whether crude oil or other major imports. It is not just global prices that are rising; insurance costs are also increasing. This underlines the importance of maintaining adequate foreign exchange reserves," she said.
The finance minister noted that India's foreign exchange reserves play a crucial role in cushioning the economy against external shocks, particularly during periods of heightened global volatility.
Monsoon, El Niño Remain Key Risks
On the near-term economic outlook, Sitharaman said the monsoon remains an important variable, especially amid concerns over below-normal rainfall linked to El Niño conditions.
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While India has sufficient food stock buffers to absorb short-term weather-related disruptions, she cautioned that farm incomes could face pressure if adverse weather conditions persist.
"Between Budget Day and today, there have been at least three major challenges, particularly in terms of supply-side disruptions," Sitharaman said.
Private Capex Linked to Demand
Hero Enterprise Chairman Sunil Kant Munjal highlighted that despite strong corporate balance sheets, private-sector capital expenditure has yet to accelerate meaningfully.
Agrawal argued that investment would follow demand.
"The private sector is very simple. If there is demand, companies will invest, produce and supply. I would not be too concerned about private-sector participation because investment ultimately follows demand," he said.