India, recognized as the fastest-growing market, has become a focal point for the world’s largest sovereign wealth funds, as indicated by a significant increase in their investments. Data compiled from the National Securities Depository Limited (NSDL) revealed a remarkable surge of nearly 60 percent in the total securities held by sovereign wealth funds in India, reaching approximately $56.35 billion (Rs 4.7 lakh crore) in the year ending April 2024. Comparatively, in 2023, these funds held assets valued at approximately $35.96 billion (Rs 3 lakh crore). In contrast, the assets under custody of foreign portfolio investors (FPIs) overall grew by about 40 percent during 2024, amounting to approximately $830.56 billion (Rs 69.5 lakh crore).
Market analysts attribute India’s growing appeal to sovereign wealth funds to its robust growth potential and favorable business environment. Over the past five years, the Indian government has streamlined compliance processes for such funds and provided special tax exemptions, particularly for sovereign wealth funds like the Abu Dhabi Investment Authority.
Neha Aggarwal Jain, Partner at Deloitte India, noted, “Promising growth rate and political stability have made India a hotspot for direct investments by Sovereign Wealth Funds. Continuance of tax sops will further encourage continued inflow of such funds.”
Leading sovereign funds such as the Government of Singapore, Abu Dhabi Investment Authority, Kuwait Investment Authority, and the Norwegian pension fund are among the prominent investors in the Indian market.
The Government of Singapore has significant investments in Indian companies like Reliance Industries and HDFC Bank. Similarly, the Abu Dhabi Investment Authority holds substantial stakes in IPCA Laboratories, Welspun, and Avas Financiers, while also being a major investor in India’s infrastructure sector through the Foreign Direct Investment (FDI) route. The Norwegian pension fund has diversified investments in numerous Indian listed companies, including Axis Bank, Bajaj Auto, and Eicher Motors.
India is not only witnessing increased interest from sovereign wealth funds but also from other foreign government institutions such as central banks. According to the Securities and Exchange Board of India’s (SEBI) classification of foreign portfolio investors (FPIs), four types of foreign government entities invest in India: sovereign wealth funds, pension funds, central banks, and other funds where a foreign government owns more than 51 percent. Together, these funds own assets worth approximately $206.10 billion (Rs 17.2 lakh crore), which constitutes nearly one-fourth of the overall FPI assets under custody.
