India will continue to attract overseas investments due to strong growth, says RBI governor Malhotra

Mumbai: The Indian economy will continue to attract foreign investments on the back of strong domestic growth, a trend evident from free trade agreements and large commitments by firms such as Google, Microsoft and Amazon, Reserve Bank of India (RBI) governor Sanjay Malhotra said on Tuesday.

“Inflows may not be linear year-on-year, but overall, India should continue attracting quality investments across banking, technology and the broader economy,” according to the transcript of his interview with television news channel NDTV Profit.

India has witnessed several large deals in the financial services sector, resulting in significant inflows of overseas capital.

Deals included Emirates NBD’s acquisition of a majority stake in RBL Bank for $3 billion; private equity firm Blackstone acquired 9.9% in Federal Bank for $705 million; and Abu Dhabi-based IHC bought a 43.46% stake in Samman Capital for $1 billion.

Malhotra stated that inflows are not the result of work done in one year, but rather reflect cumulative efforts over several years that have strengthened banks and non-bank financial companies (NBFCs).

“Investors—both foreign and domestic—are attracted by the sector’s resilience and India’s long-term growth prospects. Importantly, these are not hot money flows but long-term, patient capital,” said Malhotra.

He said that the RBI has not changed any regulatory norms to attract this investment, and the eligibility criteria remain unchanged.

“In 2025 alone, around $15 billion of committed or actual investments came into private financial entities, underscoring confidence in the system,” said Malhotra.

According to Malhotra, India’s growth story remains intact. “We grew 8% in the first half, are projected at 7.4% this year, and around 7% next year. Capital demand will remain strong,” he said.

For FY26, the six-member MPC raised its GDP forecast to 7.3% from 6.8% previously and lowered the retail inflation projection to 2%, from 2.6%.

Data released on 7 January projected the Indian economy to grow 7.4% in the current financial year, powered by strong manufacturing and services growth, healthy household spending and strong investments in fixed assets.

On Tuesday, Malhotra said inflation is currently low due to food price base effects and soft global commodity prices, largely a supply-side phenomenon.

“As base effects fade, inflation is already rising. Our projections show inflation moving towards 3–4%, which is a comfortable range. Core inflation is also well-behaved. Overall, inflation is at a level we are comfortable with,” he said.

India’s retail inflation rose for the second successive month in December, data released by the statistics ministry on Monday showed, driven by a moderation in negative food inflation and an uptick in core inflation.

At 1.3%, the consumer price index (CPI)-based inflation value hit a three-month high in December. The comparable value in November was 0.7%. Last December, CPI inflation stood at 5.2%, which declined steadily thereafter and built up an unfavourable base.