Narendra Modi is still one of the best-liked leaders at home. Global investors just don't seem to share the love.
He is in his 12th year running India, yet the money is heading for the door, and fast.
Foreign funds have already sold more Indian stock this year than in all of last year. They have dumped $29.5 billion so far, up from $18.9 billion in 2025.
The picture gets worse under the surface. India still drew in over $90 billion in long-term foreign money this past year.
That was about 13% more than the year before. But so much cash flowed back out that the net figure fell to near a record low.
In plain terms, more money is leaving than the big number suggests. That marks a real shift in how the world sees the country.
Oxford Economics' Alexandra Hermann Prasad put it plainly. India is "no longer the obvious, one-way growth story" buyers once assumed.
She blames weak spending, shaky trust, high costs, and choosier global cash. Picture India as the stock everyone owned and nobody questioned.
Now global funds are quietly selling it.
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Part of the problem is oil. India buys more than 85% of it from abroad.
So when the Iran war lifts prices and the rupee weakens, life gets pricey fast. That feeds straight into inflation.
The central bank now expects prices to rise 5.1% this year. It also cut its growth forecast to 6.6%, down from 6.9%.
The other problem is AI. A research firm called Bernstein has warned about it.
It says AI could wipe out good jobs in India's big tech-services trade. Those are high-paying roles.
Unlike the U.S. and China, India owns no major AI models of its own. That risks turning it into what one analyst called a "permanent consumer in the AI economy."
The only AI play it can really join is building data centers. But one expert said the country has simply missed the AI boat.
The government tried to slow the bleeding last week. It added a tax break for foreign buyers of its bonds.
One wealth manager called the move helpful for the mood. But he warned it "doesn't change the symphony."
The bigger fix is real reform, and the pace there has been slow. A closely watched scorecard found only two of 30 major reforms done in the past two years.
Land rules and labor laws have barely improved. Cheap, steady power and water are still hard to find, which slows new factories.
Last month, a former government adviser urged Modi to use the crisis to push bigger reforms. So far, no major steps have come.
Modi has the standing at home to push harder. So far he hasn't.
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