Challenges for India Ahead of PM Modi’s Visit to U.S.; Key Details Here

PM Narendra Modi faces a daunting task of pitching the country as an attractive destination before US investors and President Donald Trump.

The environment surrounding Indian financial assets has shifted significantly since Modi’s last visit to the U.S. two years ago where he vowed the country's booming equity market and its potential to rival China as a world factory.

As of now, FPIs have dumped Indian stocks worth $21 billion since September. While the rupee hit its fresh lows, the Indian equity market remained the worst performer in Asia this year. Trump’s threats of reciprocal tariffs are adding more fuel to the fire.

Vikas Pershad, a portfolio manager at M&G Investments Singapore Pte said, “PM Modi’s visit to Washington comes at a pivotal time” for India’s markets. Though the country is less prone to its peers, “clarity on tariff directions would help ease investor concerns,” he said.

Notably, China’s growing technological importance, buoyed by the emergence of DeepSeek, is prompting investors to shift their base to North Asian markets.

India is witnessing its worst economic growth since the pandemic and the share market remains overvalued than any other emerging market in Asia.

However, this doesn't mean that Modi will struggle for reasons in portraying the country as an economic superpower. To put things in context, India is still the world’s fastest-growing large economy. The recent slashing of personal income tax rates will help in increasing consumer spending, while the centre has pledged more than 11 trillion rupees ($128 billion) in fiscal year 2026 for infrastructure upgradation.

Ian Hui, global market strategist at JPMorgan Asset Management said in a note, “A weaker outlook for India is not the strong supportive factor originally hoped for.” He believes that, “near-term prospects are improving.”

Kunjal Gala, head of global emerging markets at Federated Hermes Ltd said, “Modi’s trip to the US will not have a material impact unless it brings reasonable certainty that the Trump administration will not target India for its lop-sided import tariffs.’