“Domestic investment is the most important thing,” Venkatakrishnan said, arguing that India should be able to withstand short- and medium-term fluctuations in foreign investment.
Foreign investors have been looking at opportunities in the US, while other markets, including Europe, have also seen weaker foreign flows. Venkatakrishnan described the movement as a global “rotation trade” and said the flow of capital could return to India at some point.
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India needs to stand on its own
Venkatakrishnan said foreign investment would continue to move towards markets offering what investors consider the best opportunities. For India, he said, the focus should be on building a market that is not dependent on these flows.
The comments come as India’s macroeconomic performance has remained stronger than expected despite global uncertainty. Venkatakrishnan said the Indian economy had weathered the disruption from higher oil prices and geopolitical tensions, with growth at 7.5%.
He also pointed to continued capital formation in India, particularly among mid-sized companies, and said Barclays sees an opportunity to help Indian companies access both domestic and global markets.
The bank is also looking to re-enter India’s equities market after being absent from the segment for several years. Venkatakrishnan said equities had been a missing part of Barclays’ India business, which already includes investment banking, markets, corporate banking and private banking.
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The foreign money question is bigger than India
Asked whether taxes, valuations or other factors were keeping foreign investors away from Indian equities, Venkatakrishnan said it could be a combination of factors, alongside the attraction of US markets.He said the decline in foreign institutional and foreign direct investment was not limited to India, with Europe also losing favour among investors. The implication, he said, is that the current movement is part of a broader allocation shift rather than an India-specific development.
For India, however, the message was that foreign flows should be treated as an additional source of capital rather than the foundation of the market.
“When it comes, we should welcome it,” Venkatakrishnan said, while stressing that India should remain resilient to fluctuations in foreign investment.
Watch accompanying video for full conversation.
