Sharma noted that foreign investors have pulled out nearly $50 billion from Indian equity markets over the past few years, while net FDI inflows have stagnated.

Ruchir Sharma explains why global investors are losing interest in India

Speaking at the Express Adda, Sharma said that India has not made progress in building data centres and digital infrastructure for AI. “The real action is in semiconductors and memory,” he said, pointing to countries such as Taiwan, South Korea and the United States, which dominate these critical segments.

According to Sharma, this structural gap has led to what he described as “unprecedented indifference” from foreign investors toward India. “That’s what the world is all about today — identifying winners and losers in the AI race,” Sharma said. “Unfortunately for India, unlike during the tech boom of the 1990s and 2000s, foreigners have taken the view that India is a loser in this race,” he added.

Backing his argument with data, Sharma noted that foreign investors have pulled out nearly $50 billion from Indian equity markets over the past few years, while net FDI inflows have stagnated. “When your net FDI is close to zero, the data speaks for itself,” he said, adding, “In my 30-year investing history, I can categorically tell you that I never seen such indifference towards India.”

According to Sharma, a key factor behind this trend is India’s low investment in research and development. “India spends roughly 0.6% of its GDP on R&D, while countries like Korea and Taiwan spends around 4-5%,” he remarked.

He had earlier said that it is “no surprise that India has no serious players in AI”.

In a January column for the Financial Times, Sharma had highlighted that countries such as China and Vietnam saw FDI inflows exceed 4% of GDP during their peak growth phases, while India’s FDI has never crossed 1.5%. Over the past decade, India has slipped from 12th to 19th among major emerging markets on this metric.

Beyond structural gaps, Sharma also pointed to persistent and emerging concerns for investors, including regulatory complexity, geopolitical tensions with neighbours, trade frictions with the United States and uncertainty about India’s long-term positioning in advanced technologies.