Story perspectives

Capital Flows to India as US AI IPOs Boom

5/26/2026

Summary

Paroda Forecasts Inflows

Prashant Paroda expects capital flows to shift to India within 18–24 months as the rupee weakens and markets underperform.
He says AI IPOs in the United States, valued above $1 trillion, will draw capital and steer investors toward India.
He adds that easing oil prices, a calmer Strait of Hormuz, and a potential U.S.–Iran deal could lower inflation expectations, easing rate-hike pressure.

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History

Historical Context

In 1991, facing a balance-of-payments crisis with reserves covering less than three weeks of imports, Prime Minister P.V. Narasimha Rao appointed Finance Minister Manmohan Singh to launch LPG reforms that dismantled the Licence Raj and opened India to foreign capital. Foreign investment rose from $132 million in 1991-92 to $5.3 billion by 1995-96, laying the groundwork for tech-driven IPO surge supported by NASSCOM and government skill initiatives.

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Paroda Forecasts Inflows

Prashant Paroda expects capital flows to shift to India within 18–24 months as the rupee weakens and markets underperform.
He says AI IPOs in the United States, valued above $1 trillion, will draw capital and steer investors toward India.
He adds that easing oil prices, a calmer Strait of Hormuz, and a potential U.S.–Iran deal could lower inflation expectations, easing rate-hike pressure.

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