India's growth potential not reflected in foreign allocations: Amundi

India's rising share of global economic growth is not adequately reflected in foreign portfolio or strategic investment flows, the head of macro policy research ​at Amundi Investment Institute said.

Despite world-beating growth, benign inflation and a ​clear path toward consolidation of public finances, India has struggled to attract flows as investors ‌pivoted to AI opportunities and remained wary of trade frictions with the US

"The share of Indian equities in global portfolios does not reflect the new era that we see for India in the coming decade," Amundi Investment Institute's Didier Borowski, said in an interview in Mumbai.

He leads macro policy research for the institute, the research arm of Europe's largest asset manager Amundi, which holds $2.7 trillion under management and has a "structural overweight," view on Indian equities.

 

Borowski said the case for India was structural, rather than a call for equities to outperform this year, adding that investors building portfolios for the coming decade should include the country.

"There is earnings visibility of ‌domestic demand. You have still a strong demographic dividend in India. And the economy is, thanks to its domestic demand, less sensitive to trade shocks," he added.

Foreign investors net sold nearly $23 billion of Indian stocks between January 2025 and 2026, pushing allocations to the country to decadal lows. A trade deal with the US, however, has helped draw back some flows over the past 10 days.

In addition to the US, India also recently concluded a trade deal with the European Union. Amundi ​expects both agreements to bolster foreign direct investment flows into the country.

Rebalancing portfolios, chasing yield

Rising geopolitical risks and ‌concerns over fragmentation in global trade will prompt investors to rebalance portfolios toward opportunities outside advanced economies, Borowski said.

He added that disruption to long-standing investment patterns could also drive diversification, ​as in ‌the case of US Treasuries which are losing their appeal as a hedge against drawdowns in risk assets, ‌he said.

"Last year, emerging market debt on average was less volatile than the US Treasury market with higher returns. You'll see more appetite for EM debt looking ahead because the chase for yield ‌will ​stay there," Borowski ​said.

Contrary to the United States and Europe, India's strong fiscal discipline alongside a stable currency bolster its appeal for fixed income investors, he added, noting that the country's ‌inclusion in major global ​bond indexes will supplement capital allocations to the country's debt markets as well.