Mumbai Recent tensions between India and Pakistan could impact New Delhi's efforts to present itself as a safe destination for foreign investors amid global economic uncertainty, but investors and analysts suggest the effect will be limited.
According to Reuters, India's $4 trillion economy has very limited direct trade ties with Pakistan, and despite recent cross-border missile attacks, no significant immediate impact has been observed on local equity, currency, or bond markets. Analysts say the likelihood of full-scale war is low, which has prevented major market disruptions.
Sut Dhora, a portfolio manager at Janus Henderson Investors, stated that recent events might temporarily deter foreign investors. UAE-based investment firm NAV Capital believes geopolitical tensions could temporarily reduce foreign investment inflows.
Subhash Chandra Garg, a former senior Indian government official, said the long-term impact of the India-Pakistan conflict on investment "will not be significant" because areas bordering Pakistan are in northern and western India, while most manufacturing facilities driven by foreign investment are located in southern and central India.
