‘Global investors are simply not thinking about India’: Praveen Jagwani, Global Head and CEO of UTI International

Why has India fallen out of favour with global investors?

 Today global investors are simply not thinking about India. When CIOs build portfolios around the MSCI All Country World Index (ACWI), the US dominates with a 63% weight, emerging markets get 11%, and India sits at just 1.9% despite being about 4% of global market cap. With such a tiny weight, nobody in New York or London or Tokyo wakes up thinking about India. Earlier, our high valuations kept investors away, but that’s no longer the issue. What has hurt sentiment instead is the Trump‑era tariffs, the sharp rupee depreciation, slowing earnings, record gold imports draining forex, and geopolitical shocks like the Iran conflict. Over the last two and a half years, FPIs have exited India, and the markets has stayed afloat only because domestic investors that has exploded from 40 million to over 220 million that have helped absorbing the FPI selling.

Where is global money flowing today?

Global investors are parking money in short-dated US Treasuries, gold, and safe currencies like the Swiss franc and Singapore dollar. There’s very little appetite for long‑duration bonds because investors are worried that yields could rise further, and there’s even less appetite for emerging markets given the volatility and currency risk. CIOs cannot deviate too far from ACWI weights, which automatically limits flows to India.

Given this backdrop, how do you convince global investors to stay invested in India?

India’s real strengths are structural such as our demographics, a rapidly expanding middle class, a consumption‑driven economy, and strong legal protections for minority shareholders that cannot be replicated by any other emerging market. As I often tell investors, the fundamental drivers of India’s growth cannot be stolen or copied. The proof being, India is the fastest‑growing market for companies like Nestlé, Unilever and P&G, and their India‑listed entities consistently outperform their global parents. When investors step back and look at this long‑term trajectory, the case for staying invested becomes much clearer. 

Then where are you seeing interest?

While flows into equity remain challenging, private credit is attracting strong interest. The appeal comes from how different Indian private credit is compared to the US. In the US, most private credit is leveraged and back‑ended through PIK (payment-in-kind) structures where interest gets rolled up and paid at maturity. In India, private credit works like an amortising loan where you get regular principal and interest payments, almost like an auto loan. This makes Indian private credit countercyclical to Western stress and appealing to global allocators. However, the biggest hurdle remains the rupee. A 10% depreciation last year wiped out returns for many global investors, even when the underlying assets performed well.

Why are global investors avoiding Indian fixed income despite 7% yields?

Hedging costs make Indian bonds unattractive. A 10-year Indian government bond yields around 6.9%, but hedging the currency costs roughly 4%, leaving a net yield of just 2.9%. In contrast, US Treasuries yield 4.4% with AAA safety. There’s no comparison. For India to be competitive, the 10-year would need to be closer to 10%.

Which Indian sectors look attractive now?

The worst of the rupee depreciation is behind us. We remain constructive on consumption because penetration levels are still low. We also like pharma, defence and BFSI, especially banks that have the cleanest balance sheets in a decade and NPLs are at multi‑year lows. Credit‑driven growth across mortgages, auto loans and credit cards still has a long runway. What we aren’t buying into is the AI narrative in India; we completely missed that wave, and the world isn’t treating our AI story as credible yet.