Foreign Investors Pull Out $21.5 Billion From Indian Markets In 2025 Amid Global Outperformance

Foreign investors have withdrawn $21.5 billion from Indian markets in the first nine months of 2025, marking the sharpest outflow among emerging markets this year. This highlights the increasing difficulty India faces in competing for global capital as investors chase stronger returns elsewhere.

Global Equities Outperform India

Indian equities have risen only 1–2% in dollar terms since January, a stark contrast to global peers. US markets have gained 10–15% on average, Asian markets have delivered 15–35%, and European indices are up 18–30% over the same period. The weaker performance of Indian equities has diminished their appeal for foreign institutional investors.

Commodities Shine in Comparison

The relative underperformance is not just limited to equities. Commodities have delivered far superior returns this year, with gold up 42.5%, silver jumping 52%, and copper gaining 18% in dollar terms. These asset classes have offered investors higher returns, further diverting flows away from Indian equities.

India Versus Other Emerging Markets

India’s outflow of $21.5 billion is the steepest among emerging economies so far in 2025. South Korea follows with foreign investor outflows of nearly $20 billion. The data underscores how India’s limited returns, coupled with stronger performances in global markets and commodities, have made it relatively less attractive to global investors.

Read More: RBI Retains FY26 FPI Limits in Government and Corporate Bonds

Conclusion

The record withdrawal of foreign funds underscores the growing challenge for India in sustaining its market appeal amid global competition. Unless Indian equities deliver stronger returns, foreign investors may continue favouring other markets and asset classes that offer higher growth and profitability.

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