Indian Prime Minister Narendra Modi’s latest visit to the United States presents a tougher challenge in positioning India as a prime investment hub for President Donald Trump and American investors.
Since Modi’s last US trip nearly two years ago—when he highlighted India’s booming stock market and economic momentum—the landscape has shifted. Foreign investors have pulled $21 billion from Indian equities since September, the rupee has hit record lows, and India’s $4.1 trillion stock market has become Asia’s worst performer among major economies. Adding to the uncertainty, Trump’s push for reciprocal tariffs has raised concerns about trade relations.
Investor Confidence Takes a Hit
Vikas Pershad, portfolio manager at M&G Investments Singapore Pte, noted that Modi’s visit comes at a critical time for Indian markets. “While India is better insulated from global trade tensions than some peers, clearer tariff policies would help ease investor anxieties,” he explained.
The need to reenergize foreign investment in India has never been greater. Meanwhile, China’s rising technological dominance, exemplified by the ascent of firms like DeepSeek, has driven US funds toward North Asian markets.
India’s economic growth is also projected to be at its weakest since the pandemic. Despite a recent correction, Indian stocks remain more expensive than other emerging Asian markets. The rupee, which once stood among the best-performing Asian currencies, has now slipped to one of the worst in 2024.
India’s Economic Strengths Remain
Despite these challenges, Modi still has key strengths to highlight. India remains the fastest-growing major economy, with an expanding base of high-income consumers. A record personal income tax cut this month is expected to boost domestic spending, while the government has committed over ₹11 trillion ($128 billion) in infrastructure development for fiscal 2026.
Ian Hui, global market strategist at JPMorgan Asset Management, acknowledged India’s near-term economic slowdown but remained optimistic. “While India has lost some momentum, its long-term outlook remains strong,” Hui stated, adding that an earnings recovery could revive investor sentiment.
Trade Talks Hold the Key
Much of India’s economic revival now hinges on corporate earnings growth. The NSE Nifty 50 index has seen profit downgrades for two consecutive quarters, and Trump’s trade policies could further strain business costs.
As Modi engages with Trump, expectations are high. Securing tariff exemptions is critical to reassuring investors wary of further disruptions.
“Modi’s US visit will only have a lasting impact if it provides clarity on trade policies and prevents India from becoming a target of Trump’s tariff agenda,” said Kunjal Gala, head of global emerging markets at Federated Hermes Ltd.
