An undated editorial illustration depicting Indian rupee cash banknotes and a stock market indicator board.
Javier Guerci | Moments | Getty Images
This report is from this week’s CNBC Inside India newsletter, delivering timely and insightful news and market commentary on emerging powers. Subscribe here.
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India’s growing investor base is increasingly attracting global attention, and there is renewed interest from fund companies.
This year, BlackRock, the world’s largest fund company, launched multiple mutual fund schemes in India through Jio BlackRock to mark the US firm’s re-entry after its exit in 2018.
State Street, the world’s fourth-largest asset manager, is reportedly considering acquiring a stake in an Indian fund house.
Global companies from the United States to South Korea are capitalizing on the boom in India’s major market by listing their Indian operations, giving fund companies more investment avenues.
The accelerating financialization of India’s household savings is driving capital flows, and as more retail investors participate in capital markets, opportunities for asset managers to handle these funds are increasing.
Global consulting firm Bain & Company estimates that retail-led assets in India’s mutual fund industry will grow to 300 trillion rupees ($3.3 trillion) by 2035 from 45 trillion rupees in 2025.
Rakesh Pozath, partner at Bain in Bengaluru, said retail mutual fund assets in India account for less than 15% of GDP compared to 80% in mature economies such as the US and Canada, and the industry has significant room for growth.
According to the report, salaried millennials and Generation Z living in large cities are increasingly putting their savings into mutual funds instead of investing directly in stocks. For many investors, investing every month is part of their discipline. As a result, holdings in long-term mutual funds are increasing, Bain said.
Investments through systematic investment plans, which invest single amounts at regular intervals, tripled to Rs 2.89 trillion in FY2025 from FY21, according to data from the Association of Mutual Funds of India.
India’s central bank noted that retail investors are increasingly preferring equity investments, primarily through mutual funds, over traditional savings vehicles. The Reserve Bank of India said in August that the share of mutual funds in the household sector’s total financial savings rose to 6% in the year ending March 2023 from 0.9% in FY2012.
As India’s economy grows, the surplus income of the middle and upper middle class is being invested in multiple financial products, said Vivek Sharma, head of international operations at Nuvama Private.
Offer scale
Experts say India’s mutual fund industry is large enough to attract the attention of global fund companies.
“Due to lack of growth in the Indian industry over the past decade, many global fund companies have either exited or significantly reduced their presence in India,” said Hiren Dasani, chief investment officer, emerging markets, WhiteOak Capital.
Mutual fund assets have now grown to the point that even large global asset management companies are interested in them, he said.
BlackRock established Jio BlackRock Asset Management as a joint venture with billionaire Mukesh Ambani’s Jio Financial Services, and received regulatory approval to launch the mutual fund in May this year. In July, it raised more than $2.1 billion across three endowment programs.
Sid Swaminathan, CEO of Jio BlackRock Asset Management, said in an interview with Bloomberg in September that he expects India’s mutual fund industry to triple in the next seven years.
India has a growing number of young, long-term investors, creating opportunities for global fund companies as well as multinational corporations.
Despite the cooling of the Indian secondary market, the Indian secondary market has been very hot this year.
In the country, companies raised $11.4 billion through 252 IPOs in the first three quarters of this year, with the final amount raised expected to exceed last year’s $19.9 billion, with a number of big listings scheduled in the final quarter, including LG Electronics, Tata Capital and Lenskart.
While there continues to be debate that some IPOs are priced too high, experts point out that strong domestic liquidity absorbs a large number of IPOs, regardless of size.
Consider the case of LG Electronics’ Indian IPO. The company’s magazine has over 150 subscribers.
About 22% of the Rs 1.6 trillion raised by mega IPOs in India in 2025 was invested by mutual funds, according to data shared with CNBC by Prime Database, an Indian capital markets research firm.
Both companies benefited from oversubscribed IPOs, while investment in mutual funds soared. According to an EY report, the IPO return in the first three quarters of this year was 17.7%, compared to the benchmark BSE Sensex’s return of just 4.4%.
The opportunities arising from India’s shift towards financial assets do not end here. Experts say the last resort this growing investor class can unleash is the flow of capital into global markets.
Indian investors are also keen to invest in US stocks to take part in themes such as the AI boom or bet on China’s resurgence, but capital control norms have limited their participation.
But mutual funds can gain overseas exposure, albeit with an industry-wide cap of $7 billion, said Dheeraj Agarwal, managing director at Ambit Investment Managers.
“Offshore investment vehicles in India are attracting a lot of attention,” he added.
Given the growing demand and size of the industry, most experts see improved access to overseas investments for small investors, which in turn will make AUM opportunities more attractive for global funds.
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India’s Ministry of Electronics and IT Secretary S. Krishnan said in an exclusive interview that the country is focused on expanding employment through AI applications, data center expansion and indirect growth.
Evan Feigenbaum of the Carnegie Endowment for International Peace said that while there are no major problems facing India and a closer relationship with Russia is the solution, India and China have considerable unrealized economic potential.
ACI Asia Pacific and Middle East head Stefano Baronsi said Indian airline IndiGo’s flight cancellations were a “transitional setback”, adding that India’s air passenger market will drive growth in the region.
need to know
Big Tech is doubling down on billions of dollars of investment in India. Within 24 hours, Microsoft and Amazon committed more than $50 billion to India’s cloud and AI infrastructure, while Intel on Monday announced plans to manufacture chips in India.
Thousands of flights were canceled and Indigo shares fell. Passengers on Indian airlines have been facing massive disruption since last Friday, as the country’s largest airline canceled thousands of flights due to changes in rules regarding pilots’ rest time. The airline said Wednesday that its operations were stable.
India’s central bank cuts policy rate to 5.25%: India’s central bank on Friday cut its policy rate by 25 basis points, in line with economists’ expectations, citing “weakness in some key economic indicators”.
Quote of the week
The big question for India is income growth and where it will come from. We need more jobs and higher wages next year, and one of the positives is the implementation of labor laws that were passed in 2020 and are finally taking effect now.
—Trinh Nguyen, Senior Economist, Natixis
at the market
The Nifty 50 index was trading 0.5% higher as of 1:40pm local time on Thursday, having risen 9.4% year-to-date. The BSE Sensex rose 0.4% on Thursday and is up 8.4% so far this year.
Benchmark India’s 10-year government bond stood at 6.639%, down from a nine-month high of 6.663% on Wednesday.
— Lim Huijie
very soon
December 12: Consumer Price Index data for November. ICICI Prudential Asset Management Co’s IPO begins
December 16: HSBC December Manufacturing PMI Report
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