FPI Concerns: FM Sitharaman Vows to Listen to Investors
Finance Minister Nirmala Sitharaman acknowledges FPI concerns over India's investment climate and pledges to consider investor feedback.
Union Finance Minister Nirmala Sitharaman has acknowledged the growing concerns among foreign portfolio investors (FPIs) and equity market participants regarding India's current investment environment. Speaking at the Financial Express Leadership Awards 2026, the Finance Minister stated that the government is mindful of shifting global circumstances and is open to considering feedback from investors to ensure India sustains its economic growth above the 7 per cent mark.
Addressing the Shift in Foreign Capital
The Finance Minister touched upon the volatility of foreign capital, noting that while net Foreign Institutional Investor (FII) outflows had risen, there are signs that inflows are beginning to recover. She emphasized that equity investments are crucial for India to maintain its growth momentum.
When discussing the role of taxes in attracting investment, Sitharaman pointed out that the tax structure remained largely similar to the 2023-24 period, a time when India saw robust foreign capital inflows. She noted that while no drastic changes were made to draw investments then, the current global landscape is vastly different, with increased challenges and changed circumstances.
While the government has spent recent years focusing on the deepening and widening of the bond market, Sitharaman admitted that voices are now calling for more support for equity markets. "I wouldn't want to say more at this stage, but I recognise the voice," she remarked, signaling a willingness to review the situation.
Consumption and Private Investment Trends
On the domestic front, the Finance Minister expressed confidence in India's consumption story. She cited the latest GST collection figures as a primary indicator that demand remains sustained. According to Sitharaman, the implementation of next-generation GST reforms has made consumption and demand more visible, which in turn is encouraging companies to explore fresh investments.
She further observed that private sector investment is on the rise, though she noted that companies are being selective about the sectors they enter. This uptick in investment is being attributed to the improved visibility of market demand.
Bridging the Skill Gap and AI Integration
Turning to the labor market, Sitharaman highlighted a critical disconnect between the skills possessed by young graduates and the actual requirements of the industry. She mentioned that the government has prioritized skilling initiatives over the last two budgets to bridge this gap.
A key focus moving forward is the integration of Artificial Intelligence (AI). The Finance Minister stressed the importance of preparing the workforce to utilize AI across various industries, including the Micro, Small, and Medium Enterprises (MSME) sector.
Reviewing PLI and Business Reforms
The Finance Minister also defended the Production-Linked Incentive (PLI) scheme, explaining that incentives are granted based on additional production. However, she provided a candid assessment, admitting that while the scheme has been successful in certain sectors, performance in others has been weaker and requires closer examination.
To further ease the cost of doing business, Sitharaman pointed toward reforms in:
- Government procurement processes
- Tendering procedures
- Project execution frameworks
The Finance Minister concluded by urging industry leaders to maintain a constant dialogue with the government, encouraging them to communicate their investment plans and the specific challenges they face in the current economic climate.