After a difficult start to 2026, extending last year’s relative underperformance, India might not look like the obvious place for growth seeking investors. Indian equities have recorded their weakest relative start of the year performance to emerging markets in more than 30 years, weighed down by sentiment-driven pressures rather than any meaningful deterioration in fundamentals.
But beneath the surface, powerful structural forces are aligning. And for Aussie investors willing to look past recent volatility, India may be quietly setting up for a compelling multi year opportunity.
Why India’s outlook is changing
Three key factors are helping strengthen India’s investment case:
Policy stability and fiscal discipline
India’s recent Union Budget reinforces a credibility-first approach. The government is reducing its fiscal deficit while maintaining significant capital expenditure, particularly across transport, energy, and defence. Continued investment in infrastructure supports long term productivity, while incentives for electronics, semiconductors, and clean energy help shore up domestic manufacturing and supply-chain resilience.
Trade clarity is improving
The long anticipated US–India trade deal removed a major overhang for markets, easing tariff uncertainty and improving sentiment among foreign investors. With further discussions underway with Europe, India is strategically positioning itself within global and US aligned supply chains.
AI infrastructure is emerging as a growth engine
For years, India played a supporting role in global technology, but has been left out of the AI trade narrative. That is beginning to shift. Major global tech companies (including Amazon, Microsoft, Google, Meta and others) have announced large-scale commitments to AI, cloud, and data-centre buildouts across the country. With hyperscaler spending accelerating, India is aiming to transition from an outsourcing destination to a foundational AI infrastructure hub.
What investors need to know
While optimism is rising, investors should remain aware of the risks. India’s recent underperformance highlights that sentiment can turn quickly, and although valuations have normalised, corporate earnings still need to catch up to earlier expectations. Market recoveries are rarely linear.
Still, for long-term investors, India’s mix of supportive policy, improving trade conditions, and AI driven capital investment, alongside its enduring multi-decade demographic tailwind, provides a credible structural growth story. Monitoring quarterly earnings and foreign capital flows will be key for spotting the early signs of momentum returning.
How to gain exposure
Investors seeking diversified, large cap exposure to India’s growth story may consider ETF options such as the Global X India Nifty 50 ETF (NDIA), which tracks 50 of India’s largest companies and is currently the lowest cost Indian equity ETF on the Australian market
