The Norway Contradiction: Modi Seeks Investment As India Weight Slips In Norges Portfolio

Prime Minister Narendra Modi on Monday invited Norwegian companies to expand investments in India, pitching the country as an attractive destination for manufacturing, clean energy and long-term growth. However, his outreach to Norway's business community comes at a time when the world's largest sovereign wealth fund — Norway's Norges Bank Investment Management (NBIM), has been steadily trimming India's portfolio weight amid market underperformance and changing global capital flows.

Speaking at the India-Norway Business and Research Summit, Modi highlighted reforms undertaken by India over the past decade, including changes in taxation, labour regulations and governance aimed at improving ease of doing business. Addressing an audience comprising over 50 CEOs and more than 250 business and research participants, he called for deeper economic engagement between the two countries.

"The foundation of the partnership between the two countries is very strong. We should increase the intensity of this partnership and take it to the new frontier," Modi said.

The Prime Minister particularly highlighted clean energy opportunities and directly invited Norway's sovereign wealth fund to become a larger participant in India's energy transition. "Investment in clean energy is a priority for the Norwegian wealth fund," Modi said, asking it to become an important partner in India's future growth plans.

His remarks gain significance because Norges Bank's recent investment activity has moved in the opposite direction.

India Loses Weight In Norway Fund

According to the fund's latest disclosures, India's share in Norges Bank's global portfolio declined by roughly 40 basis points to 2.1% as of December 31, 2025. While the reduction sparked debate over whether global investors were turning cautious on India, analysts believe the move reflects portfolio mechanics and relative market performance rather than a structural loss of confidence.

India emerged as the only major market in the fund's portfolio to deliver negative returns during the year in dollar terms. While Norges generated overall portfolio returns of around 15% in 2025, its India investments declined approximately 1.4%.

The reduction also coincided with higher allocations to several other Asian markets. China's share in the portfolio increased to 3.6%, while Taiwan's allocation climbed to 2.7%, overtaking India.

Large sovereign wealth funds such as Norges largely follow benchmark-linked allocation frameworks where stronger-performing markets automatically gain weight while weaker-performing markets see their share decline. In such structures, portfolio movement often reflects market performance rather than active investment calls.

Vinayak Magotra, Product Head and founding team member at Centricity WealthTech, said India's decline should not be interpreted as a reflection of economic weakness.

"There was a reduction in India's weight within Norges Bank's Government Pension Fund Global, down around 40 basis points to 2.1%. However, this was not due to any structural weakness in the economy or concerns over India’s long-term growth story," he said.

According to Magotra, India's underperformance was largely linked to currency depreciation, while returns in local currency terms remained positive.

Global Money Chasing New Themes

Analysts suggest the changing composition of Norges’ portfolio also reflects a broader shift underway in global investing.

Taiwan emerged as one of the best-performing markets in the sovereign wealth fund's portfolio, delivering nearly 37% dollar returns during the year. Stronger performance from technology and semiconductor-linked businesses significantly supported allocations.

Magotra said investment trends are increasingly being shaped by themes rather than geography.

"Globally, investment positioning has been driven less by geography and more by exposure to AI infrastructure, semiconductors and digital ecosystems," he said.

According to him, Taiwan's outperformance itself reflects that trend and portfolio reallocations may continue favouring markets linked to AI-led growth opportunities.

Akshat Garg, Head of Research and Product at Choice Wealth, with a similar view, arguing that Norges’ reduced India exposure reflects broader global repositioning rather than India-specific concerns.

"NBIM's reduced India exposure is less about India-specific concerns and more about a global portfolio reset," Garg said.

He noted that the fund itself reported a 1.9% quarterly loss amounting to nearly $68 billion during the January-March period as geopolitical tensions in the Middle East triggered a broader risk-off environment across global markets.

Adani Exit Added To Narrative

The investment discussion around Norway's sovereign wealth fund also gained attention after recent exclusions of Adani Group entities from its portfolio.

Norges had earlier excluded Adani Ports in May 2024 and subsequently removed Adani Green Energy from its investment universe, citing concerns around "gross corruption or other serious financial crime". The exclusions added to perceptions around changing investment preferences, although analysts believe these decisions were driven by ESG frameworks rather than broad India exposure concerns.

At the same time, capital concentration towards the United States has also become increasingly visible.

According to Garg, nearly 40% of Norges’ $2.2 trillion portfolio currently remains invested in US equities. Growing allocations toward technology, renewable infrastructure and AI-linked opportunities have increasingly attracted global institutional capital.

"Capital is rotating toward US technology and renewable infrastructure globally," he said.

Modi's Timing And Investment Pitch

Despite the recent reduction, India's importance within the Norwegian fund remains significantly larger than a few years ago. Between 2021 and 2024, the value of Norges’ India portfolio nearly doubled to around $36 billion before moderating to approximately $31.4 billion by the end of 2025.

Analysts note that India's investment story continues to be supported by domestic consumption, manufacturing expansion and infrastructure spending. The fund itself has gradually shifted its India portfolio towards equities over recent years, reducing fixed-income exposure and increasing participation in listed companies.

For Modi, therefore, the Norway visit appears to be as much about attracting fresh investment as reinforcing India's long-term investment case at a time when global capital increasingly seeks markets linked to new growth themes.

Experts believe that if India's earnings growth improves and market performance catches up with peers, portfolio allocations from large passive funds such as Norges could rise automatically.