Citi India: $80bn foreign inflows possible by 2026-end

What Citi is projecting for foreign inflows

Citi India CEO K Balasubramanian said India could attract as much as USD 80 billion in foreign capital by the end of the year, following a series of central bank measures aimed at improving the country’s appeal for overseas investors. He made the comments in an exclusive interview on Insight with Haslinda Amin, alongside additional remarks around Citi’s India Conference 2026 in Mumbai. The message from Citi’s leadership was that the long-term India growth story remains intact even if near-term flows are uneven. Balasubramanian also linked the outlook to improving policy clarity and the expectation of more supportive market conditions later in the year.

RBI measures and the pitch to overseas investors

Balasubramanian’s remarks were framed around steps taken by India’s central bank to make the market more investor-friendly. While the measures were not itemised in the provided text, he tied them directly to the possibility of higher foreign participation by year-end. He also positioned foreign capital as important to India’s broader development ambitions, especially given the size of the investment requirements he described for infrastructure and the energy transition. The core argument from Citi was that policy direction and macro stability are key inputs for foreign investors considering long-duration allocations.

Jane Fraser’s message at Citi India Conference 2026

At the Citi India Conference 2026 in Mumbai, Citi Group Chair and CEO Jane Fraser reaffirmed India’s status as the world’s fastest-growing major economy. She urged investors and stakeholders to look past short-term headwinds and focus on what she described as a long-term trajectory. Her comments aligned with Balasubramanian’s view that near-term volatility does not change the longer investment case. Together, the remarks were positioned as an institutional endorsement of India’s medium-term to long-term opportunity set.

India-US trade agreement: why Citi sees an added tailwind

Balasubramanian said a proposed India-US trade agreement could strengthen trade and investment flows between the two countries. He described the India-US corridor as one of the most important markets for both India and Citi, and said the bank is watching for the announcement of the agreement. He added that the expectation is the agreement would further increase activity in an already strong corridor. Separately, he highlighted that investments coming from the United States into India remain “quite robust,” reinforcing Citi’s view that cross-border linkages are a critical channel for capital.

Foreign portfolio selling seen as temporary

Balasubramanian described the recent withdrawal by foreign portfolio investors (FPIs) from Indian equities as a temporary global-allocation trend rather than a structural break. He pointed to continued international participation in primary markets as a constructive signal. In that context, he said it is “only a question of time” before foreign money returns, especially with IPO markets opening up in 2025 and attracting overseas demand. He also noted that shifts like these occur across global markets as investors rotate between regions and themes.

How Citi explains the FDI picture: strong gross, softer net

Balasubramanian broke foreign direct investment into gross and net flows, arguing that gross FDI remains robust at about USD 80 to USD 90 billion, and has held in that range for at least the last three to four years. He said net FDI has been trending down due to multiple factors that increase outflows. These include global companies raising capital in India via local subsidiaries and then moving money out, as well as exits by private equity investors. He also flagged outward investments by Indian conglomerates as another contributor that can reduce net FDI even if headline inflows stay healthy.

Citi’s India strategy after exiting retail banking

Balasubramanian said Citi exited the retail business in India three years ago and is now focused on institutional banking. He described a strategy built around deepening coverage of key clients, expanding commercial banking as a growth engine, and maintaining leadership in investment banking across advisory and capital raising in private and public markets. Citi also plans to use its network across 94 countries to support Indian conglomerates and multinationals entering India. He said capital released from the consumer business has been reinvested into the institutional franchise, and that the India top line is 25% higher than the combined consumer and institutional sales base of three years ago.

Capital markets pipeline and M&A expectations

Balasubramanian said the size of transactions expected in 2026 could be larger than what the market has previously seen, and suggested activity could pick up from Q3 through Q4 as clarity improves. On IPOs, he said Citi has taken American, European, and Asian companies to India’s equity markets in recent periods, and that the pipeline for the next 12, 18, and 24 months suggests the trend continues. He also said Citi anticipates a surge in M&A activity over the next ten years, driven by demand for quality assets from global capital and succession-related transitions in family-owned businesses. He added that Indian banks are now better capitalised and should play a larger role in acquisition financing than in the past.

Key numbers at a glance

Market impact: what matters for investors and issuers

The immediate market takeaway from Citi’s comments is the focus on the interaction between policy signals, cross-border corridors, and primary-market activity. Balasubramanian’s view is that foreign selling in secondary markets can reverse if conditions stabilise, particularly when IPO demand from international investors is already visible. His breakdown of FDI suggests investors should distinguish between strong gross inflows and weaker net outcomes when interpreting the health of foreign capital formation. He also linked policy clarity around trade arrangements to incremental investment, especially in themes the government is “super focused on,” such as manufacturing.

Risks and constraints highlighted in the remarks

Balasubramanian also pointed to trade-tariff uncertainty in a separate context, saying around 60% of products could be covered and that if tariffs remain at 50%, it could make India uncompetitive in affected segments. He said there was frontloading of sales in calendar 2025 and FY2026, and suggested this could blunt the near-term impact on corporate results, although he flagged the competitiveness risk if high tariffs persist. On the macro side, he said the core economy continues to do “quite okay,” referencing positive GDP prints for Q1 and Q2 of FY26, along with a good monsoon that could support rural cash flows.

Conclusion

Citi’s India leadership is arguing that the long-term growth narrative remains intact, while near-term foreign flow volatility should be read in the context of global allocation cycles. Balasubramanian’s central claim is that policy actions and improving visibility, including around an India-US trade agreement, can help India attract up to USD 80 billion in foreign capital by year-end. He also positioned Citi’s own India strategy as tightly focused on institutional banking, capital markets, and cross-border connectivity. The next milestones, based on the remarks, are the timing and details of the proposed trade agreement and how capital markets activity shapes up through Q3 and Q4.