AI Money Flows, But Not Via India

As global capital pours into AI-led growth, India risks being sidelined, with companies focused on efficiency over innovation and investors chasing markets building scalable AI value.

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The global race in AI is no longer about who has the best tech but where the money is flowing. And right now, the US is attracting a huge share of global AI investment, with companies spending heavily on building new models, data centres, and AI-led products. 

A report published by Stanford University mentions that $285.9 Bn was accounted for in 2025 for private AI investments in the US, which is more than 23X the $12.4 Bn invested in China. Even with growing concerns about an ‘AI bubble’, investors are putting more money into the space.

India, however, is not part of this bull run. Unfortunately, foreign investors have been pulling out funds and moving towards markets and companies offering stronger exposure to AI-driven growth. 

This is not because Indian companies are not using AI — they are, but mostly to improve efficiency, cut costs, and protect margins. What’s missing is the evidence of AI being used to build new products, platforms, or revenue streams at scale. 

At a time when the next wave of tech growth is taking shape, does India risk being left behind as the world progresses with fresh investments? Let’s talk all about it in this edition of The AI Shift.

Where’s The Capital Flowing

Foreign portfolio investors (FPIs) have been pulling money out of India at a record pace. In March 2026 alone, FPIs sold $12.58 Bn worth of Indian equities, the highest monthly outflow on record, with net selling across 21 of 23 sectors, according to the National Securities Depository Limited (NSDL).

This is not a one-off event. FPI equity assets under custody (AUC) dropped from nearly $930 Bn in September 2024 to around $660 Bn by March 2026, a near 29% decline. Part of this is explained by macro triggers such as geopolitical tensions, inflation concerns, and rupee weakness.

On the opposite spectrum and amid ongoing global volatilities, the US ETF market saw $112.9 Bn in net inflows........

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