
FPIs Pull Out $2.27 Billion So Far In April, Biggest Since May 2020: What's Driving The Shift?
FPIs, who had been injecting funds into Indian debt for four consecutive months, have shifted gears in April, yanking out over $2.27 billion so far.
As inflation continues to smolder in the United States and market volatility grips Wall Street, the ripple effects are beginning to hit home thousands of kilometres away, specifically in India's debt market. Despite India's relatively stable economic environment and easing inflation, foreign investors are pulling billions out of the country's bond market, lured instead by rising returns in the US.
According to a Moneycontrol report, foreign portfolio investors (FPIs), who had been injecting funds into Indian debt for four consecutive months, have shifted gears in April, yanking out over $2.27 billion so far. This marks the most substantial monthly withdrawal since the onset of the pandemic in May 2020 and breaks a five-month streak of net inflows.
Market watchers attribute the abrupt reversal to a narrowing yield gap between Indian and US government bonds, a critical factor for foreign capital seeking fixed-income returns. At the start of April, India's benchmark 10-year government bond was yielding 6.6%, but that has since slipped to 6.33%.
Meanwhile, yields on the US 10-year Treasury have climbed from 3.99% to 4.35%. The resulting spread, now down to just 200 basis points, is the slimmest it's been in over two decades, dating back to September 2004.
India Ratings and Research Director, Soumyajit Niyogi, noted that the comparative allure of US bonds has grown sharply. Given the heightened market uncertainty and stubborn inflation in the US, interest rate cuts from the Federal Reserve seem increasingly unlikely in the short term. Higher yields on US bonds are drawing foreign capital away from emerging markets like India, he said.
Ironically, the very instability plaguing the US economy – persistent inflation, fears of escalating trade tariffs, and the Fed's cautious stance – is contributing to this shift. While US President Donald Trump has been vocally pressuring the Federal Reserve to cut rates, the central bank remains unmoved, opting instead to maintain elevated rates in a bid to curb inflation.
Back home, India's economic fundamentals remain strong. Inflation is easing, the rupee has appreciated roughly 3% from recent lows, and liquidity in the financial system is ample. The Reserve Bank of India (RBI) is even purchasing bonds in the open market, a move that typically supports prices and lowers yields. Yet, none of these positives have been enough to stem the tide of foreign capital outflows.
Gopal Tripathi, Treasury Head at Jan Small Finance Bank, believes the Indian bond market still holds promise. Currently, the 10-year bond yield is trading about 100 basis points above the repo rate of 5.25% to 5.50%, which is quite favourable by historical standards. But with global conditions tilting in favour of the US, we're witnessing some inevitable churn, he said.
Analysts warn that this shift could trigger a broader rebalancing of global debt portfolios, especially if the US continues to offer comparatively attractive returns.
Hashtags

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


Time of India
31 minutes ago
- Time of India
Fuel switch checks clear Boeing 787s, 737s in AI fleet
Air India NEW DELHI: Air India said Tuesday it has completed inspections and found no faults in the fuel control switch (FCS) locking mechanism on all its Boeing 787 Dreamliners and AI Express Boeing 737s. The checks followed a July 14 directive from DGCA, which ordered Indian carriers to inspect the FCS on all Boeing aircraft. The move came after the June 12 crash of AI-171 in Ahmedabad. Both engines of the London-bound Dreamliner lost power mid-air soon after take-off. According to preliminary probe, fuel supply was cut off when FCS switches for engines 1 & 2 moved from "run" to "cut-off" - one after the other - with a gap of one second. Investigators have not yet determined what caused the switches to transition. "Air India has completed precautionary inspections on locking mechanism of FCS on Boeing 787 and 737 aircraft in its fleet," the airline said in a statement. "With this, the two airlines have complied with DGCA's July 14 directive. No issues were found." The airline said results have been shared with DGCA and reaffirmed its "commitment to the safety of passengers and crew members". by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Villas For Sale in Dubai Might Surprise You Villas in Dubai | Search Ads Get Info Undo The US Federal Aviation Administration had issued a special airworthiness information bulletin in Dec 2018 warning of potential disengagement of the FCS locking mechanism in some Boeing aircraft. Since SAIB was advisory & not mandatory, Air India had not acted on it earlier.


Time of India
an hour ago
- Time of India
US, Indonesia sign trade deal: Trump calls it ‘huge win'; mineral access, Boeing deal for America
. United States and Indonesia have agreed on a new trade deal that will reduce tariffs and allow more American goods into the Southeast Asian country. The White House said on Tuesday that Indonesia will also ease its export restrictions on critical minerals like nickel, copper and cobalt — which are key for electric vehicles and electronics. Under the deal, US will lower a planned tariff on Indonesian products from 32 percent to 19 percent. However, items suspected of being transshipped to avoid duties will face a higher 40 percent rate. US president Donald Trump celebrated the agreement on his social media platform, Truth Social on Tuesday, calling it a 'huge win' for American businesses. He said Indonesia will cut 99 percent of its tariff barriers, making it easier for US companies to sell industrial, tech and agricultural goods there. . In return, Indonesia is expected to buy American products, including Boeing aircraft, farm produce and energy. The two countries are still working on finalising the agreement in the coming weeks. A US official said the deal could be worth at least $50 billion for the US in terms of new trade and purchases. The official also said Indonesia will no longer try to tax cross-border data flows — something the US had opposed — and will accept US vehicle safety standards. The agreement comes ahead of a 1 August deadline, when the US is set to raise tariffs on several countries. Similar trade deals have also been announced with Britain, Vietnam and the Philippines.


Time of India
2 hours ago
- Time of India
India-UK free trade deal approved: which luxury and labor-heavy industries will cash in big?
India's Union Cabinet finally approved the country's free trade agreement with the United Kingdom on Tuesday, July 22. This agreement, formally called the Comprehensive Economic and Trade Agreement, will be formally signed by India's Commerce and Industry minister Piyush Goyal, along with Britain's counterpart Jonathan Reynolds on July 24. Indian Prime Minister Narendra Modi, and British Prime Minister Keir Starmer will be there to witness the proceedings. The Comprehensive Economic and Trade Agreement aims to smoothen out trade hurdles between India and the United Kingdom by imposing a zero-duty regime on Indian exports such as textiles, leather goods and footwear. The United Kingdom will also face reduced tariffs on luxury exports such as Scotch whiskey and premium cars. The India-UK free trade agreement benefits India's labor-intensive industries The free trade agreement that was just approved by India's Union Cabinet is focused on bolstering India's most labor-intensive industries. Textiles, leather goods and footwear continue to have high production costs due to the labor-intensive process required to ensure product quality. If the United Kingdom imposes zero import duties on these industries, a whole new market will open up. #WATCH | London, UK | Speaking on the UK-India Free Trade Agreement (FTA) at the India Global Forum, Union Minister Piyush Goyal says, "It is unfair to call it a giveaway. Indian people add value to the UK economy when they come here...""This is not something we raised after… This trade agreement is part of a wider effort by Narendra Modi's government to maximize export opportunities for Indian industries, as well as attract foreign investment. As Indian exports become more profitable and sough-after, Indian enterprises may garner additional funding and investment from foreign parties. Likewise, the reduced tariffs on the UK's luxury goods ensure that the markets of that country open up to a new customer base of wealthy Indians. From 2024 to 2025, the value of India's exports to the United Kingdom has risen by 12.6% to $14.5 billion. The value of imports India received from the UK grew by 2.3% to $8.6 billion. The India-UK agreement is yet to be ratified by the UK parliament While India's cabinet has approved of the bilateral free trade agreement, the United Kingdom has its own process of ratification, which will occur after the signing ceremony on July 24. Due to the Labor party's majority in the parliament, this process seems unlikely to face any hiccups. India, UK concludes FTA; An elated UK PM releases video of his telephonic talks with PM Modi. Calls FTA historic Aside from the trade agreement on goods and services, India and the United Kingdom have also inked out an agreement on Social Security, known as the Double Contribution Convention. This will allow Indians who have short-term work contracts in the United Kingdom to avoid double contributions to their social security funds, ensuring they keep more of their earnings. The Comprehensive Economic and Trade Agreement has been a long time in the making, with negotiations on the pact concluding on May 6. This agreement is projected to double the value of bilateral trade between the two nations to $120 billion by 2030.