
When homegrown capital outgrows foreign funds: Can India fund its own growth?
In a historic reversal, domestic institutional investors (DIIs) have overtaken foreign portfolio investors (FPIs) in their shareholding of companies listed on the National Stock Exchange (NSE)—a shift that speaks volumes about India's maturing capital markets.
According to Prime Database, as of the March 2025 quarter, DIIs held a 17.62% stake in NSE-listed companies, against FPI ownership of 17.22%. This 40 basis point shift reflects a profound structural transformation.
After decades of dominance by foreign investors, Indian capital is now taking centre stage in its own market. The question is no longer just about ownership; it's about control, influence, and long-term financial self-reliance. Is India now in a position to fund its own growth story?
To appreciate the scale of this change, consider that FPIs held over 21% of NSE market capitalization in 2020. Their stake has steadily declined due to outflows driven by global monetary tightening, rising interest rates in the West, and geopolitical volatility.
In contrast, DIIs, including mutual funds, insurance companies, pension funds, and banks, have more than doubled their share since 2020, when they owned just 13.58 % of listed companies.
A significant catalyst behind this rise has been the surge in mutual fund investments. Assets under management (AUM) of Indian mutual funds crossed ₹60 lakh crore in December 2025, up from ₹22 lakh crore in 2020, according to AMFI (Association of Mutual Funds in India).
In fact, total amount collected through SIP during March 2025 was ₹ 25,926 crore, highlighting a broad-based retail revolution fuelling DII inflows. Add to this the increasing equity allocation by long-term institutions like the Employees' Provident Fund Organisation (EPFO) and the Life Insurance Corporation (LIC), and the result is a deepening pool of domestic capital with a long-term orientation.
This transition couldn't come at a better time. In 2022, FPIs pulled out nearly ₹1.21 trillion from Indian equities due to aggressive rate hikes by global central banks. Despite this, Indian markets remained remarkably resilient — the benchmark Nifty 50 delivered a 20% return in 2023 alone. The reason? DIIs and retail investors stepped up and bought the dips, cushioning the market from global shocks.
For the last 100 months (ending April 2025), the traded volume of FPIs and DIIs in Indian equities bear a high negative correlation of -0.85, which is stronger at -0.96 during the last 12 months.
Also Read: Gold, stocks and FPIs: What the market crystal ball foretells for the next three months
India turns inward
This behavioral shift is a sign of market maturity challenging the long-standing narrative that Indian equities depend on foreign flows to sustain momentum. The new reality is that Indian markets now have a large, committed domestic base that believes in India's long-term fundamentals.
This growing domestic ownership has consequences beyond market stability. DIIs now have a stronger say in corporate governance. They are increasingly pushing for transparency, ESG adoption, better board practices, and responsible capital allocation.
Institutional activism—once seen only among global investors —is slowly but surely taking root among Indian institutions as well. But influence must be wielded responsibly. They must vote thoughtfully on key resolutions, prevent value destruction, and ensure companies stay aligned with broader shareholder interests.
Securities and Exchange Board of India (Sebi) has been instrumental in pushing for greater disclosure and stewardship codes — but enforcement and consistency remain crucial.
DIIs have benefited from a long bull run and growing investor confidence. But what happens when markets face prolonged correction or macro headwinds? Will retail flows into mutual funds sustain, or reverse? Also, FPIs are known to return quickly when global conditions turn favorable.
Also read | India won the emerging market race again in FY25. Will it become a safe haven too?
Nonetheless, this episode has demonstrated a fundamental truth: India can be robust to global shocks and volatility led by foreign capital, if DIIs remain committed. Much of this progress can be credited to policy shifts over the last decade — allowing EPFO to invest in equities, digitizing KYC, launching Bharat Bond ETFs, increasing SIP awareness, and deepening market access through platforms like UPI and mobile trading. Financial inclusion is no longer just a banking metric — it's now visible in equity ownership.
Going forward, further reforms to encourage retirement fund participation in markets, incentivise long-term investing, and protect retail investors will be key. Equally important is fostering trust through consistent regulation, reduced mis-selling, and robust investor education.
For a long time, India chased foreign capital as a validation of its growth story. But this shift in ownership suggests something deeper: that confidence in India's future now comes from within. That perhaps, for the first time, Indian savings are aligning with Indian aspirations.
And in a world riddled with uncertainty, that kind of homegrown conviction might just be the most valuable capital of all.
Pratibha Kumari is an assistant professor at TAPMI Bengaluru and Nishat Alam Choudhury is a postdoctoral researcher at Aalto University, Finland.

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Hindustan Times
33 minutes ago
- Hindustan Times
Excise duty on liquor goes up by over 50%, retail prices to rise from 14% to 60%
MUMBAI: The cash-strapped Maharashtra government on Tuesday increased the state excise duty on Indian-made foreign liquor (IMFL) by over 50%, which will lead to a significant increase in retail prices by over 60%. It has also increased the duty on country liquor and imported premium liquor, which will hike their retail prices by 14% and over 25% respectively. The excise duty on beer and wine has not been increased. The government expects the whopping hike to increase its revenue to ₹57,000 crore, up ₹14,000 crore from the ₹43,620 crore collected in FY 2024-25. It expects 10% of the estimated revenue receipts of ₹5.60 lakh crore for the financial year 2025-26 to come from this. While tapping sources of revenue that would enable the drained exchequer to bear the burden of populist schemes like Ladki Bahin and sops for farmers and other communities, the Mahayuti government in January constituted a committee headed by then additional chief secretary Valsa Nair to recommend steps to increase revenue from liquor sales. The committee submitted its report in April this year, and the state cabinet gave its assent to this on Tuesday. Based on the recommendations of the committee, IMFL will now attract four and a half times excise duty on the manufacturing cost instead of the existing three times. 'This will vary based on the manufacturing price but could lead to a huge hike of over 60% in retail prices,' said an excise department official. The cost of IMFL currently ranges between ₹120 and ₹150 for 180 ml, which will now go up to a minimum of ₹205. Premium brands will cost a minimum of ₹360 for 180 ml as against their current rate ranging between ₹210 and ₹330. The price of 180-ml bottles of country liquor has gone up to ₹80 from the current price of ₹70. Beer and wine have been exempted from the excise duty hike. Officials said the retail price of beer, which has a lesser percentage of alcohol compared to hard liquor, is among the highest in the country and was thus exempted. In the case of wine, it is the policy of the state to promote wine since a significant chunk of the country's wineries are in Maharashtra and a significant number of farmers who supply grapes for these wineries are also based here. The government has also introduced a new category called Maharashtra-made liquor (MML), which will also be exempted from the hike. MML brands, made from grains, will cost a minimum of ₹148 for 180 ml, a price that has been strategically kept in the existing price range of IMFL to help MML capture the IMFL market. An official from the excise department said that the new category had been introduced to revive the 70 manufacturing units that manufacture IMFL from molasses and grains. 'Currently 22 of the 70 licenced units are entirely defunct while 16 do no manufacturing and renew their licence only for permission to sell liquor through their shops,' he said. 'The remaining 32 are actually manufacturing the liquor, and 10 of these produce 70% of the IMFL manufactured in the state.' The official added that distilleries using molasses would have to shift to making grain-based liquor in order to get the benefit of the exemption. The reason for this, he alleged, was that most of the grain-based manufacturing units are owned by politicians and the decision was taken to benefit them. The duty hike on IMFL brands has come after 14 years. According to officials, the excise duty levied is still lower than other neighbouring states like Madhya Pradesh and Telangana. 'The committee's recommendations were based on the study of the rates in other states,' said an officer. Another officer said that the hike in duty on country liquor brands was minimal since a greater increase and higher price would lead to the consumption of illicit liquor. 'It is also because the last hike was done in 2022,' he said. The cabinet has also allowed owners of bars to rent out permit room licences for alcohol by paying 10% of the licence fee.


Mint
40 minutes ago
- Mint
Harman's India DTS is up for sale: Here are the top bidders
MUMBAI : Global private equity firms including Apax Partners, Bain Capital, Carlyle and General Atlantic are vying for a controlling stake in the digital transformation services (DTS) business of Harman US in India, three people aware of the development said. Harman US, a Samsung Group company, is looking at a valuation of $400-500 million for the Indian DTS business. 'Currently, the funds are doing due diligence. The second round of bids is likely only next month," one of the people cited above said on the condition of anonymity. Harman US has hired global investment bank Deutsche to help with the process. Mint was the first to report on the group's plans to sell a controlling stake in the India business on 12 May. Harman US is famous for its JBL, Harman Kardon and Infinity audio products; however, these are separate from its DTS business that's up for sale in India. Also read | Mint Exclusive: JBL maker Harman to sell controlling stake in India unit A Harman India spokesperson said, 'Harman does not comment on market speculation or rumors. As a global leader in technology and innovation across the automotive, consumer, and enterprise markets, we remain focused on delivering solutions that amplify life experiences. We are always exploring opportunities to strengthen our business, enhance our capabilities, and deliver value to our customers and stakeholders." Spokespersons for Apax and Carlyle and General Atlantic declined to comment, while Bain Capital did not respond to emailed queries. Among top brands Harman US is a Connecticut-based manufacturer of audio systems, automotive infotainment systems, lifestyle products, and connectivity solutions provider. It is counted among the top brands globally, with the majority of the revenue being derived from the automotive business and has contracts from some of the leading automotive original equipment manufacturers (OEMs). It operates in more than 30 countries. Also read | Global PE firms eye stake in Tessolve at $300 mn valuation Harman's DTS business builds systems for clients across life sciences, high-tech, and industrial and consumer sectors. It helps life sciences and med-tech companies accelerate clinical trials and modernize platforms. For high-tech firms, it helps simplify platform engineering, accelerate development, and unlock end-of-life revenue. It also helps industrial and consumer clients to operate smarter and serve better—through real-time factory insights, connected ecosystems, and enterprise systems. Revenue driver The DTS business, particularly its Indian operations, plays a crucial role in driving revenue growth for the group. India is a centre of excellence for the DTS business, with a significant number of employees based here. India is a major hub for technology development within Harman's DTS business, with a substantial workforce and a focus on key verticals like healthcare, communications, and industrial. Harman India is a wholly owned subsidiary of Harman US. It has four major business segments, namely, Lifestyle, India Development Centre, Connected Car, and Professional. Also read | Carlyle group sells 2.6% stake in Yes Bank for ₹1,775 cr via bulk deal Harman Group joins the list of global companies looking to sell or monetize their India business. 'For Harman, the DTS business is non-core to its global strategy and it is looking to monetize it," the second person cited above said. In the recent past, companies such as Thyssen Krupp, Haier and Siemens Gamesa have considered selling their Indian business and focusing on their core business. With private equity firms getting active along with domestic business houses which are hungry for inorganic growth, the deal activity in this segment is likely to pick up going forward.


Time of India
an hour ago
- Time of India
Car interiors take centre stage as buyers focus on cabin experience
Pune: Software engineer Rishabh Agarwal decided to buy an SUV and after he had decided on the brand, Agarwal paid an extra one lakh to the showroom dealer only to get his car interiors customised. He spent the extra money on his brand new car on panoramic overheads, ambient neon lighting bordering the sunroof, touch screen display, and also a central console. Passenger vehicles have undergone a major change in recent years and customers don't buy them just for their mobility needs. Cars are offering a lot more these days — be it safety or lifestyle features. ambient lighting, touch screen technology, an increasing number of sensors, cameras, radars, and other elements are changing the interiors of cars converting them nearly into a living space. Showroom executives said customers were willing to spend nearly 50 % of the cost of the car on the interiors and sometimes even get them customised based on their needs. As a result, car interiors manufacturing companies have set up plants in Chakan to cater to the growing needs of the customers in this segment. General manager of sales at a Wakad-based car showroom, Nikhil Sampat, said, "Car interiors are evolving based on the choice of customers. Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 5 Books Warren Buffett Wants You to Read In 2025 Blinkist: Warren Buffett's Reading List Undo They are no longer in the mood to buy what already comes with the car, they always want more and they are ready to pay for that extra special touch." Citing this demand, one of the world's largest manufacturers of vehicle components, Antolin India expanded its operations by opening a new manufacturing facility in Chakan. The company manufactures diverse functions such as acoustics, safety, panoramic overheads, and lighting, along with cockpit modules or central consoles. Antolin products are supplied to leading brands such as Tata, Mahindra, Skoda Volkswagen and Suzuki. "Indian cars would have features such as collision warning systems, driver fatigue detection systems, proximity sensors, face recognition for door locking and unlocking. The focus is now shifting towards ease of driving and comfort inside the car," said Alfonso Martinez Matosas, managing director of Antolin in India. The conpany is developing a lighting system that could optimise the driver's pupil diameter by inhibiting adverse effects caused by low-light conditions and thus improving the driver's vision. "This system, called NightSight, would allow users to reduce glare from headlights or better appreciate shapes in low visibility situations. Now, lighting has become a fundamental element in the interior of the vehicle, playing a crucial role for road safety," Matosas said. Car interiors are increasingly becoming an extension of a vehicle owner's living room or office. Shruti Muchchal from Rasta Peth said, "When I decided to buy my sedan, I wanted to feel luxurious inside. I opted for specialised seat covers with my businesses' name embossed. Also, I wanted dashboard and top surface lighting, as well as the step board lighting in blue and green. I received the delivery of my customised vehicle almost 25 days after its registration." A car dealer in Vimannagar, Jignesh Gupta, said customers are willing to spend an additional amount for their interior needs. "In the past six months, at least 25-30 customers have opted for specialised interiors. The primary requirements are lighting, consoles, touch screens, and a luxury feel inside the vehicle. We forwarded these requirements to the manufacturers and the work on the add-ons began," said Gupta. Pune: Software engineer Rishabh Agarwal decided to buy an SUV and after he had decided on the brand, Agarwal paid an extra one lakh to the showroom dealer only to get his car interiors customised. He spent the extra money on his brand new car on panoramic overheads, ambient neon lighting bordering the sunroof, touch screen display, and also a central console. Passenger vehicles have undergone a major change in recent years and customers don't buy them just for their mobility needs. Cars are offering a lot more these days — be it safety or lifestyle features. ambient lighting, touch screen technology, an increasing number of sensors, cameras, radars, and other elements are changing the interiors of cars converting them nearly into a living space. Showroom executives said customers were willing to spend nearly 50 % of the cost of the car on the interiors and sometimes even get them customised based on their needs. As a result, car interiors manufacturing companies have set up plants in Chakan to cater to the growing needs of the customers in this segment. General manager of sales at a Wakad-based car showroom, Nikhil Sampat, said, "Car interiors are evolving based on the choice of customers. They are no longer in the mood to buy what already comes with the car, they always want more and they are ready to pay for that extra special touch." Citing this demand, one of the world's largest manufacturers of vehicle components, Antolin India expanded its operations by opening a new manufacturing facility in Chakan. The company manufactures diverse functions such as acoustics, safety, panoramic overheads, and lighting, along with cockpit modules or central consoles. Antolin products are supplied to leading brands such as Tata, Mahindra, Skoda Volkswagen and Suzuki. "Indian cars would have features such as collision warning systems, driver fatigue detection systems, proximity sensors, face recognition for door locking and unlocking. The focus is now shifting towards ease of driving and comfort inside the car," said Alfonso Martinez Matosas, managing director of Antolin in India. The conpany is developing a lighting system that could optimise the driver's pupil diameter by inhibiting adverse effects caused by low-light conditions and thus improving the driver's vision. "This system, called NightSight, would allow users to reduce glare from headlights or better appreciate shapes in low visibility situations. Now, lighting has become a fundamental element in the interior of the vehicle, playing a crucial role for road safety," Matosas said. Car interiors are increasingly becoming an extension of a vehicle owner's living room or office. Shruti Muchchal from Rasta Peth said, "When I decided to buy my sedan, I wanted to feel luxurious inside. I opted for specialised seat covers with my businesses' name embossed. Also, I wanted dashboard and top surface lighting, as well as the step board lighting in blue and green. I received the delivery of my customised vehicle almost 25 days after its registration." A car dealer in Vimannagar, Jignesh Gupta, said customers are willing to spend an additional amount for their interior needs. "In the past six months, at least 25-30 customers have opted for specialised interiors. The primary requirements are lighting, consoles, touch screens, and a luxury feel inside the vehicle. We forwarded these requirements to the manufacturers and the work on the add-ons began," said Gupta.