Indian Bond Market Challenging for Foreign Investors
Foreign investors would find India more appealing if its bond market were easier to access, said Mike Coop, Chief Investment Officer for Europe, Middle East, and Africa at Morningstar Investment Management.
“I think the bond market is pretty interesting, but harder to access as a foreigner particularly, you can't access it directly very easily. Indian retail investors can't even access it directly very easily, which is crazy,” Coop told Mint in an interview.
Morningstar Investment Management, part of Chicago-based Morningstar Inc., manages over $300 billion globally. Coop’s remarks highlight challenges India faces in attracting foreign capital this year amid global uncertainties, such as renewed trade tensions under US President Donald Trump, weak domestic earnings, and high valuations.
Decline in Foreign Portfolio Investment
- Foreign portfolio investment (FPI) in the Indian bond market dropped from $18.30 billion a year ago to $7.98 billion as of November 4, according to NSDL data.
- FPIs invested $1.3 billion in the Debt General Limit category during this period.
- The Debt Voluntary Retention Route (VRR) experienced net outflows of $928 million.
This data reflects operational barriers and limited market access that continue to discourage sustained foreign inflows despite increased participation via fully accessible routes.
Author's summary: Despite growing interest, India’s bond market remains difficult for foreign and even retail investors to access, limiting capital inflows amid global and domestic challenges.