India's economy will keep drawing foreign investments thanks to strong domestic growth, according to Reserve Bank of India Governor Sanjay Malhotra. He made this statement during an interview with NDTV Profit on Tuesday.
Growth Momentum Drives Investor Confidence
Malhotra pointed to several factors supporting continued foreign investment inflows. Free trade agreements and major commitments from global giants like Google, Microsoft, and Amazon demonstrate this trend. "Inflows may not be linear year-on-year, but overall, India should continue attracting quality investments across banking, technology and the broader economy," the governor stated in the interview transcript.
Financial Sector Deals Show Strong Interest
The financial services sector has witnessed significant overseas capital inflows through several large deals. Emirates NBD acquired a majority stake in RBL Bank for $3 billion. Private equity firm Blackstone purchased 9.9% in Federal Bank for $705 million. Abu Dhabi-based IHC bought a 43.46% stake in Samman Capital for $1 billion.
Malhotra emphasized that these investments reflect cumulative efforts over several years rather than work done in just one year. These efforts have strengthened both banks and non-bank financial companies.
Patient Capital, Not Hot Money
"Investors—both foreign and domestic—are attracted by the sector's resilience and India's long-term growth prospects," Malhotra explained. He stressed that these represent long-term, patient capital rather than speculative "hot money" flows.
The RBI governor clarified that the central bank has not altered any regulatory norms to attract this investment. All eligibility criteria remain unchanged from previous years.
Strong Economic Fundamentals
Malhotra highlighted India's solid growth trajectory. "We grew 8% in the first half, are projected at 7.4% this year, and around 7% next year. Capital demand will remain strong," he stated.
For the 2025-26 financial year, the six-member Monetary Policy Committee raised its GDP forecast to 7.3% from 6.8% previously. The committee also lowered the retail inflation projection to 2% from 2.6%.
Data released on January 7 projected the Indian economy to grow 7.4% in the current financial year. This growth is powered by strong manufacturing and services expansion, healthy household spending, and robust investments in fixed assets.
Inflation Situation Comfortable
Malhotra addressed inflation concerns during his interview. He noted that inflation currently remains low due to food price base effects and soft global commodity prices. These factors represent largely supply-side phenomena.
"As base effects fade, inflation is already rising. Our projections show inflation moving towards 3–4%, which is a comfortable range. Core inflation is also well-behaved. Overall, inflation is at a level we are comfortable with," the governor explained.
Recent data supports this assessment. India's retail inflation rose for the second successive month in December. The consumer price index-based inflation reached 1.3%, marking a three-month high. This compares to 0.7% in November and 5.2% in December of the previous year.
Investment Numbers Tell the Story
The governor provided concrete numbers to illustrate investor confidence. "In 2025 alone, around $15 billion of committed or actual investments came into private financial entities, underscoring confidence in the system," Malhotra revealed.
This substantial investment demonstrates that both domestic and international investors recognize India's economic potential. The country's growth story remains intact according to the RBI governor's assessment.
