FII outflows show India offering higher returns to investors: FM

Finance Minister Nirmala Sitharaman addresses FII outflows from India's equity markets, highlighting good returns and investor behavior.

Foreign Institutional Investment (FII) outflows from India’s equity markets show that investors are booking profits, indicating investments in India are yielding good returns, Finance Minister Nirmala Sitharman said at a post-Budget media briefing in Mumbai on Monday (February 17, 2025).

“FIIs also go out when they are able to, or in a position to book profits. Indian economy today has an environment in which investments are also leading good returns. That’s also happening,” Ms. Sitharaman said, dismissing concerns that the Indian stock market had become less attractive for retail and foreign investors alike.

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Underlining the volatility of foreign investors, Finance Secretary Tuhin Kanta Pandey said, “As you know that FIIs keep moving up and down depending upon where they want to really park themselves. And it is not true that FIIs are really moving from one emerging market to another.”

He further said that whenever there was a global uncertainty, “they are ready to go back to the U.S., where they belong.”

Acknowledging that there were demand-supply issues that need to be filled, he said that these were temporary and the Indian economy was resilient. He asserted that the financial sector cannot be in a bubble and the returns were eventually in the real sector, where there is less cause for worry.

The statements from the Finance Ministry assume importance in the context of continued FII outflows from India’s equity markets. Experts cite tariff uncertainty with the U.S., tepid corporate earnings and uncertain domestic growth as downside risks behind the volatility in FPI outflows.