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Ajay Garg, Managing Director & Founder, EquirusIndia is steadily advancing on the global stage. From breaking into the world’s top five economies to hosting the largest youth population and becoming the top market for stock derivatives trading by volume, our trajectory has been remarkable.
Yet, two key indicators highlight areas where we still lag:
Why MSCI Weightage Matters
The MSCI indices serve as a critical benchmark for global capital allocation. While the US accounts for 26% of global GDP, its MSCI World Index weight has surged from 50% to 70% over the past decade. India, despite improving its weight in the MSCI Emerging Markets Index from ~8% to 19%, still punches below its weight in global capital allocation.
Given the massive $115 trillion global equity capital pool, even minor shifts in MSCI allocations can significantly influence capital flows and market performance.
What the US Has Done Right
The US market benefits greatly from:
- Open access to global capital
- Deep international operations of listed firms
(Top 10 US companies derive ~40% of revenues internationally) - Robust American Depository Receipts (ADR) ecosystem with over 2,400 programs
(Providing exposure to top firms across geographies)
These factors fuel demand and investor interest and have made the US the world’s best performing equity markets over the past few decades. What India Can Do
As India aims to enhance its global relevance, it must work towards becoming a capital-raising hub for emerging markets and APAC countries. A key enabler could be allowing companies from APAC or other emerging markets to directly list in India, even if they are not listed in their home markets. This would:
- Provide access to deeper liquidity (unlike many other developing markets, Indian stock market is not dominated by a few sectors or a handful of stocks)
- Help price discovery for firms with relatively underdeveloped equity markets
- Increase India’s share in global equity flows
A specific push to attract, say, 50-100 overseas issuers to raise foreign depository receipts (DRs) or a cumulative $5-10 billion in value could materially improve India’s market capitalisation and importantly provide a geographic diversification to Indian investors without the need to look overseas. To support this, policy reforms and enablement of Indian investment banks are vital. This includes:
- Liberalising listing norms for foreign firms
- Incentivising DR market-making
- Streamlining cross-border regulatory approvals
Rethinking Currency Depreciation Strategy
A persistent concern for global investors is Rupee depreciation against the US dollar. While some policymakers believe this helps boost exports, the evidence is mixed.
China, for instance, has maintained export competitiveness without significant currency devaluation. Given India’s negative merchandise export gap, it’s time to revisit whether a weak Rupee is a sine qua non for long-term competitiveness.
The Road Ahead: A $10 Trillion GDP and Beyond
India is en route to becoming a $10 trillion economy, but to fully capitalise on this, we must:
- Increase our market capitalisation-to-GDP ratio from the current ~1 towards levels seen in the US (~2.7)
- Broaden sector representation in listed markets even more than what we already have to better capture the emerging growth sectors along with established ones
- Deepen capital markets infrastructure and participation
Tripling or even quadrupling India’s market cap is not out of reach—but it requires sustained reforms, global capital access, and a vision to make India the equity capital gateway for Asia.(This article is authored by Ajay Garg, Managing Director & Founder, Equirus. All views expressed are personal.)
- Published On Sep 28, 2025 at 08:00 AM IST
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