Finance Minister Sitharaman flags US and AI‑linked capital outflows as risk for India by 2027

Capital outflows intensify

Finance Minister Nirmala Sitharaman told CNBC on Friday, during the IMF‑World Bank meetings in Bangkok, that the flight of capital toward the United States and AI‑linked markets is "a concern" for India as it looks toward 2027. Foreign portfolio investors (FPIs) have pulled ₹52,100 crore from Indian equities in October alone, following a ₹35,861 crore withdrawal in September. Cumulative outflows this year total $33 billion, according to data from the National Securities Depository Limited (NSDL). The pressure has helped push the benchmark BSE Sensex and Nifty 50 down roughly 12 % since the start of the year.

AI‑linked markets lure investors

The same investors are gravitating to AI‑driven opportunities in the United States, Taiwan and South Korea. A Goldman Sachs report dated 8 October notes that Taiwan now makes up 29 % of the MSCI Asia‑Pacific ex‑Japan index, while South Korea accounts for 22 %. India’s share has slipped to 10 % from about 19 % a few years ago. In the US, firms such as Nvidia, Meta and Oracle are at the centre of the AI spending surge, while Asian chipmakers TSMC, Samsung and SK Hynix are also seeing heavy inflows.

Government view on economic fundamentals

Sitharaman stressed that India’s underlying economic health remains robust despite the market dip. She said the country has not yet attracted the scale of AI‑related investment flowing into the United States or East Asian markets, and therefore a potential collapse of the global AI rally would not materially hurt India. "The fundamentals of the Indian economy remain sound," she said, adding that the government continues to monitor macro‑economic stability and foreign‑investment trends closely.

What the data show

According to the Central Depository Services Ltd (CDSL), cumulative FPI withdrawals from Indian equities have reached ₹3.12 lakh crore in 2026 – almost double the ₹1.66 lakh crore withdrawn during the whole of 2025. The outflows come amid higher US bond yields, a stronger dollar and elevated crude‑oil prices, all of which have weighed on investor sentiment.

The finance ministry’s message is clear: while the shift toward AI‑centric assets abroad is reshaping global capital flows, India’s policy framework and growth trajectory remain on a steady path, and the government is prepared to address any spill‑over effects.