India is confronting significant challenges in attracting capital flows due to the evolving global investment environment. Developed countries are pursuing renewed manufacturing ambitions, which intensifies competition for capital. The artificial intelligence sector is driving capital investment across borders, affecting foreign direct investment. Despite signs of improving FDI inflows, short-term pressures on Indian assets and currency persist. Policymakers must respond effectively to this geopolitical and geoeconomic uncertainty to sustain growth.
