The Pacific Pension & Investment Institute (PPI) convened in Toronto, Canada, July 22-24, 2026. The roundtable theme, “The New Disorder: Capital, Conflict, and Rules That No Longer Hold,” captured the moment and provided compelling fodder for discussion. Members addressed how geopolitical shifts, advances in artificial intelligence (AI), and evolving infrastructure needs are reshaping global investment strategies. Sessions highlighted challenges and opportunities inherent in a fragmented international order, increased defense spending, AI integration and asset allocation, and infrastructure transformation amid energy demands.
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Executive Seminar in New Delhi
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GROWTH
At 7-8 percent annual GDP growth,India remains the fastest-growing large economy within the G20. Between 2020and 2026, India has navigated six major supply shocks: the COVID-19 pandemic, the war in Ukraine, U.S. tariffs, China’s rare-earth restrictions, the Iran war, and the AI boom. Despite these disruptions, India’s sovereign debt as a percentage of GDP only increased by 7.4 percent between 2019 and 2025, while 10-year government bond yields rose by 79 basis points over the same period.
India’s macroeconomic fundamentals remain relatively strong. For FY26, the current account deficit is projected at0.6 percent of GDP, compared with a typical level below 2 percent over the past decade and occasionally below 1 percent. CPI inflation stands at 4.8 percent, while foreign exchange reserves total US$726 billion. Fiscal consolidation has also progressed, with the fiscal deficit steadily declining to 4.3 percent of GDP and the debt-to-GDP ratio reaching 55.6 percent, having trended downwards since 2021. These improvements have contributed to sovereign credit rating upgrades.
Nevertheless, India faces fournear-term headwinds: unsettled trade relations with the United States, energy supply and price disruptions, the absence of domestic AI champions, and higher interest rates in developed economies. At the same time, India’s economic strengths lie in food and agro-processing, labor-intensive manufacturing, and labor-intensive services. As one observation noted, “If the AI boom stumbles, India is well placed to gain.” However, India remains a claimant rather than a holder of real resources, particularly industrial materials, leaving it exposed to external supply constraints.
Prime Minister Narendra Modi has articulated a vision for India to become a developed market economy by 2047. This remains an aspirational goal, intended to rally the country toward a broader vision of national progress and greatness.
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LABOR
India’s economic growth has been geographically uneven, particularly in the populous eastern states, contributing to an uneven distribution of employment opportunities that remain heavily concentrated in urban centers. Measuring employment is also complicated by India’s broad definition of work, which includes informal and non-contracted activities; as one observation put it, “I work, but I don’t have a job.” India has now begun publishing quarterly labor market data covering non-farm sectors, providing more regular insight into employment trends.
Women’s labor force participation remains a significant structural challenge. An estimated 20–30 percent of Indian women between the ages of 20 and 30 are neither in the labor force nor pursuing education, reflecting what was characterized as a distinctly “masculine” pattern of economic growth. One important constraint is the lack of investment in social care infrastructure by both the public and private sectors.
Rising household incomes can also contribute to women’s withdrawal from the labor force, as families become less dependent on an additional source of income. Intra-household bargaining further influences these decisions: the marginal income a woman could contribute may be perceived as less valuable than the care she could provide to her family.
Progress on labor law reform remains slow, while India’s education system faces a persistent mismatch between academic qualifications and practical workplace skills. Many graduates are qualified on paper but lack the capabilities required for real-world employment. Consequently, double-digit youth unemployment coexists with companies struggling to fill job vacancies, highlighting a disconnect between the supply of educated workers and the skills employers demand.
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POLITICS
The Bharatiya Janata Party (BJP) has been dominating Indian politics for the past 13 years, repeatedly winning elections and providing a degree of political continuity and stability. The party is unlikely to splinter into smaller political formations, given its organizational strength and centralized leadership. At 76, Prime Minister Modi continues to participate in local BJP election campaigns, demonstrating his sustained involvement in the party’s political machinery and potentially positioning him to control, or at least significantly influence, a managed succession within the BJP. The Modi administration has also established what was characterized as the most centralized government in modern Indian history since independence, with state governments increasingly subject to central government control or pressure in pursuit of national interests as defined by New Delhi. This centralization, however, exists alongside a highly fragmented electoral calendar, with local elections taking place somewhere in India on almost any given day, frequently competing for the central government’s attention.
Hindu nationalism has become increasingly embedded in India’s political and social landscape under the BJP, with growing influence over the country’s institutions and constitutional framework. India is, after all, a Hindu-majority country, and the BJP approaches Hindu identity pragmatically, recognizing the importance of demographic composition in electoral politics. This political trajectory nonetheless raises questions about India’s constitutional identity as a secular republic, in which the state is not supposed to be religious. While Hindu nationalism increasingly dominates the political landscape, concerns persist over systemic oppression and discrimination against religious minorities. The caste system also remains deeply ingrained in Indian society, politics, and the broader national consciousness, reflecting its historical and continuing association with Hindu religion and India’s social identity. This persists despite affirmative action programs in education, politics, and other areas.
The BJP has also made considerable efforts to expand social welfare provision, using welfare programs as an instrument of political populism and electoral support. However, a significant segment of the population remains economically stuck in what was described as the “stuck 60 percent”: the middle class, which cannot readily graduate into the upper class but earns too much to qualify for low-income social welfare programs. The BJP’s political and economic approach has been characterized as prioritizing both the ultra-wealthy and the poor, leaving this broad middle-income segment relatively underserved. India’s socialist legacy also shapes its political economy, with the traditional tensions between labor and capital seen elsewhere in the world arguably less pronounced in India.
Political stability at the national level does not necessarily translate into uniform policy support across the states. Nuclear power projects, for example, have encountered significant local opposition, reportedly costing the BJP electoral support and seats in coastal states. More broadly, whether India is governed by a single-party administration, such as the BJP, or a coalition government may matter less than commonly assumed. Although a single-party government may enjoy greater credibility and predictability among international partners, it does not necessarily command greater domestic legitimacy. A coalition government, by contrast, may be better positioned to represent India’s considerable regional, cultural, religious, and political diversity.
Freedom of expression in India is broadly established at the individual level, but the institutional environment for organized expression through television and news media is deteriorating. Social media presents a similarly complex dynamic: described as an “unguided missile,” it has facilitated recent Gen-Z protest movements and political mobilization, while simultaneously enabling the proliferation of hate speech and cybercrime.
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GEOPOLITICS
The global order is currently evolving into a hybrid system, with characteristics reminiscent of the 19th century, in which multiple powers compete for influence without a clearly dominant organizing authority. Historically, multipolarity has been inherently unstable, as competing national interests, shifting alliances, and geopolitical rivalries make international coordination more difficult. Rather than a return to fully integrated globalization, the emerging paradigm is one of “selective globalization,” in which countries and companies increasingly prioritize strategic interests, economic security, and geopolitical alignment. Adapting to this reality is critical, as the traditional investment principle that “capital follows returns” increasingly competes with a new consideration: “capital follows flags.”
India aspires to become a rule-maker in the emerging global order rather than simply a rule-taker. However, the extent of its leverage over the United States, China, and other major powers remains an important question. Its most sustainable source of geopolitical influence may ultimately be consistently high economic growth.
India’s foreign policy increasingly reflects a strategy of multi-alignment to navigate multipolarity: engaging the United States, managing its relationship with China, cultivating Europe, and reassuring Russia. There remains an ongoing debate over whether India should be considered a middle power or a major power, reflecting the gap between its growing economic and geopolitical ambitions and its actual capacity to shape international outcomes.
India’s approach toward China is increasingly pragmatic, encompassing both Chinese goods and Chinese capital, although there are internal debates over the appropriate degree of economic engagement. This positioning creates what can be described as India’s “double-hedge”: benefiting from the China+1 strategy by attracting manufacturing and investment outside China, while also capitalizing on the US+1 strategy by providing an alternative market and production base for companies seeking to diversify sales and supply chains beyond the United States.
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TRADE
India’s expanding trade relationships are an important component of this strategy. The India-EU trade deal is particularly significant, alongside ongoing trade negotiations with the United States, Canada, Gulf countries, and even China. Prime Minister Modi may potentially undertake an international tour focused on signing trade agreements.
Inspired by industrial policy models in China and Vietnam, India’s Production Linked Incentive (PLI) schemes have become a principal mechanism through which the government communicates its industrial priorities and engages with the private sector. The schemes are intended to incentivize domestic manufacturing, attract investment, and develop globally competitive production capabilities. The smartphone industry illustrates the progress of this approach: In 2025, approximately 40 percent of smartphones manufactured in India were exported, with Indian-made smartphones entering the United States continuing to benefit from a 0 percent tariff.
India’s trade policy remains shaped by concerns over its trade deficit with China. India withdrew from the Regional Comprehensive Economic Partnership (RCEP) in 2021, largely out of concern that greater trade liberalization would widen its already substantial trade deficit with China, which remains India’s largest bilateral trade deficit. Consequently, India is unlikely to pursue multilateral free trade agreements involving China or Hong Kong, preferring to negotiate bilateral arrangements that offer greater control over market access and trade exposure. In this context, India is pursuing bilateral free trade agreements with Mexico and other Latin American countries.
Meanwhile, the Indian rupee has depreciated by approximately 17 percent in real terms over the past four years, an important consideration for assessing India’s export competitiveness and import costs.
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TRADE
India’s expanding trade relationships are an important component of this strategy. The India-EU trade deal is particularly significant, alongside ongoing trade negotiations with the United States, Canada, Gulf countries, and even China. Prime Minister Modi may potentially undertake an international tour focused on signing trade agreements.
Inspired by industrial policy models in China and Vietnam, India’s Production Linked Incentive (PLI) schemes have become a principal mechanism through which the government communicates its industrial priorities and engages with the private sector. The schemes are intended to incentivize domestic manufacturing, attract investment, and develop globally competitive production capabilities. The smartphone industry illustrates the progress of this approach: In 2025, approximately 40 percent of smartphones manufactured in India were exported, with Indian-made smartphones entering the United States continuing to benefit from a 0 percent tariff.
India’s trade policy remains shaped by concerns over its trade deficit with China. India withdrew from the Regional Comprehensive Economic Partnership (RCEP) in 2021, largely out of concern that greater trade liberalization would widen its already substantial trade deficit with China, which remains India’s largest bilateral trade deficit. Consequently, India is unlikely to pursue multilateral free trade agreements involving China or Hong Kong, preferring to negotiate bilateral arrangements that offer greater control over market access and trade exposure. In this context, India is pursuing bilateral free trade agreements with Mexico and other Latin American countries.
Meanwhile, the Indian rupee has depreciated by approximately 17 percent in real terms over the past four years, an important consideration for assessing India’s export competitiveness and import costs.
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Investor Decision-Making Within Today’s Uncertainties
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The Big Picture
The United States appears set to resume its recent growth pattern of approximately 2.8 percent after 2.2 percent in 2025. A tariff plateau is integral to this more bullish case. The U.S. administration appears more focused on maintaining the tariff regime than on further increases, likely to avoid additional price hikes before the midterm elections.
European trends appear generally weaker, in part because technology contributes significantly less to European growth. German fiscal expansion driven by defense spending may provide a short-term boost, and Spain may also remain a bright spot, but France offers a countervailing case. Deficits, debt, and taxation are high, and the appetite to cut social spending is absent.
China’s macroeconomic story is two-fold. Manufacturing for export to the global economy remains strong due to cost advantages and could pull the growth forecast higher. Yet the domestic economy drags heavily on growth, in part because its housing bubble has burst. Taken together, China’s historically high trade surplus appears set to continue growing.
Investors will continue to monitor the relative rewards for alpha and beta based on these inputs, and newer asset allocation methods will help.
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The Choices
Total Portfolio Approach (TPA) methods in
creasingly frame how investors think about asset allocation. The essence of TPA is that it allows an investor to accept a wider tracking error to adjust the portfolio and achieve higher compound returns dynamically. This is closer to an absolute-return mindset, an improvement over relative-return mindsets that ignore risk within benchmarks. The options market can inform investors about how to create that additional upside. It distinguishes between upside and downside volatility, unlike the Sharpe model, which assumes they are symmetrical. Importantly, it often takes time for this upside to materialize, and investors who adopt this asset allocation model first need to build trust with their board, so they are not stopped out along the way.
The foundation of that trust is understanding the drawdown that the board can endure and conveying to the board how staff will manage risk to respect that boundary. Focusing on drawdown instead of a reference portfolio is also advantageous because the diversification assumed by the reference portfolio is absent in stressed markets.
Trust is a comparative advantage once an investor gains it. Higher trust means fewer constraints. One example is re-risking during a market phase change. An investor who can see others’ constraints and re-risk when they choose is likely to profit.
Building and maintaining this trust is an ongoing effort for investors.
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The Decisions
The work of asset owners—and the managers who support them—is to allocate assets in ways that finance pensions or meet other long-term needs, subject to board and sponsor oversight. This is about managing risk and uncertainty effectively, rather than filling out portfolios based on prior market prices and then assessing them against broad index benchmarks.
Investors increasingly focus on the liquidity of assets rather than whether they are traded publicly or privately. Their diversification effect appears overstated because correlations tighten under stress, and what distinguishes them is that public market investments are the primary source of total fund liquidity for repositioning.
Investors will apply these decision-making methods to AI-related allocations. Top-down, it is clear that AI will drive massive transformation; that the specific winners and losers will not be clear for some time; and that the pace and path of the transition will be uneven.
Markets with those traits tend to reward long-term risk-taking by investors who think critically about the entire distribution of opportunity, not just means and medians, and can shift it a bit to the right.
Many other decisions are necessarily bottom-up right now. It is difficult at best to define a top-down AI factor, and even when one seems to come into focus, it is obsolete within months. Underwriting securities and portfolios at the pace that AI is moving through the markets is challenging enough.
Steering portfolios through these and many other choices will remain allocators’ top priority. From their perspective, modern economies have many buffers that can absorb noise, geopolitical or otherwise, and allow them to focus on the trends most likely to matter over time.
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Liquidity in Private Markets
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Evolving Opportunity
The pandemic shock fundamentally changed investors’ approach to liquidity in private markets. Liquidity was critical; many investors had to turn to the secondaries market, and they learned along the way that secondaries can be helpful in more ordinary times as well. The result was destigmatization.
Limited Partners (LPs) can use secondaries to trim and concentrate portfolios to achieve the specific risk profile they seek. For instance, LPs commonly want growth exposure and may rebalance via the secondary market when a particular fund holds more mature companies that choose to remain private. General Partner (GP) buyers also benefit because they can purchase assets continuously, at the pace of their underwriting discipline.
Net asset value (NAV) financing also offers important tools. These loans are an option when an LP wants to continue holding an investment but also access liquidity. They can also allow a GP to continue adding attractive companies to a portfolio late in its life, after all investment capital has been called, or to fund capital calls without having to sell on the secondary market.
Evolving Participation
Evergreen structures and regulatory change are helping retail investors enter the private markets. In general, the volume of these private wealth inflows does not seem large enough to affect institutional pricing anytime soon – with one clear exception. AI companies often turn to high-net-worth investors first and at levels that can affect institutional deal flow.
Institutions may experience a shift in the supply of co-investment opportunities as retail participation in private markets grows. No-fee/no-carry deals can make sense for GPs when the LP is committed to making investments when they are available. Institutional LPs that negotiate these deals do not always follow through on co-investments, though, and private wealth investors can be more efficient for GPs in those cases.
Institutional LPs may benefit from making faster, more effective decisions on co-investment opportunities and from remaining diligent about the risk of liquidity mismatches for GPs, including pursuing limits on the overall size of a fund and the share of it accessible to retail investors.
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Table Discussions: Should Investors Run Towards or Away From the AI Bubble?
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Building Understanding
Investments in AI today are historic. Approximately one percent of gross global product is going to AI right now. Only four other technologies have matched that scale over the past 200 years: rail, electrification, agricultural mechanization, and the internet.
Agentic AI is just one component of this overall investment, but it may have the biggest eventual impact. It can:
Bring human decision-making to the forefront. For instance, investors know that being early to a trade is most profitable, and they can let an AI agent handle speed of execution while keeping humans focused on the contrarian thinking needed for investment strategy.
Reshape how asset owners and managers work together. Owners may be able to use agentic AI for internal diligence on co-investment opportunities, for example, and commit more of the available shares and drive down marginal costs. It could also help owners monitor investments they chose not to make and learn how well they select and size opportunities.
Offer the massive combinatorial thinking needed to see more of the potential interactive effects of investments. A prime example would be how infrastructure allocations may need to change alongside investments in self-driving transport.
Investors may benefit as much from what they can learn and scale from these investments as from the returns on particular positions right now. Owners can benefit particularly because, given the duration of liabilities, the exact pace at which this unfolds is less important.
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Capitalizing on Understanding
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Investors must adjust their asset allocation as the AI revolution unfolds. Markets want to know which companies will be winners and which will be losers. This is a reasonable question, given the low volatility of mega-cap equities and investment-grade credit, but that reflects net inflows more than investment certainty. Single-name volatility within these indices is high, and AI thematic risk is concentrated.Rebalancing has served long-term investors well over time and will likely continue to do so. This measured approach can also help investors better understand the problems they are trying to solve or the risk-taking they are financing with AI allocations.Looking ahead, AI is very capital-intensive, so productivity gains are likely to spread much more slowly than from the internet, to which AI is often compared. Time is an asset for investors.
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Mobility as an Example
Multiple types of companies are part of the AI mobility transition. These include vehicle manufacturers, owners, drivers—whether human or AI—and platforms such as Uber, Lyft, and others. Businesses compete within these categories but have to cooperate across them. For instance, a company providing AI driver technology depends on the manufacturer, vehicle owner, and platform being compatible with that service.
Investors’ underwriting of these assets will include bottom-up thinking, such as the market for data generated by AI-driven vehicles, and top-down considerations, such as the asset class or risk factor that will house investments with venture-style upside today but potentially infrastructure-like cash flows in the future.
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The World Order and the Investable Universe
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The End of Pax Americana
Pax Americana has ended. Historical allies of the United States are not going to extend that trust to the U.S. again. Canadian Prime Minister Mark Carney stated this fact out loud in his speech at Davos.
China is using transatlantic friction to sharpen its message to Europe: “What you see is what you get with us, but Americans are so unpredictable.”
By contrast, Russia is threatening Europe, and European countries’ responses vary widely. Poland and the Nordic and Baltic countries are truly committed to investment in their defense. German defense investment appears substantially motivated by national economic competitiveness. In some other countries, the commitment to defense spending seems more like rhetoric than reality.
One fact is clear. U.S. influence around the world will be lower for the long term. The U.S. has dismantled large parts of its diplomatic apparatus, and even if more traditional administrations return to power, they will have to spend time and money rebuilding rather than using those tools.
Other inferences also seem likely. Tariffs seem entrenched. Critical mineral competition appears persistent. Alliance relationships may rebound partially from their severe low today.
Foremost, whatever replaces Pax Americana is likely to be more complex.
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The Coming World Order(s)
The driving question for countries and institutions around the world today is, “What’s next?” The question does not have an answer right now. Indeed, the recent world order may be replaced by multiple orders operating in parallel. Investors would find that particularly challenging because capital may not flow freely, constraining the investable universe.
Innovation is surging within the disruption. Private investors may find the opportunity in next-generation defense technology, but the challenge will be going to where this innovation is happening, in Ukraine. Defense innovation today will achieve scale only if investors finance it where it is occurring.
Investors will help determine “what’s next” by how open they can keep their investable universe, how they take on financing innovation, and how well they can preserve the interconnected industrial base of Western countries.
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Bottom Line
Strategically capitalizing on the AI revolution is the foremost choice facing institutional asset allocation today. Private markets are expanding the investors’ decision-making toolkit by becoming more liquid, even as changes in the world order add major uncertainty. Steering portfolios through these and many other choices will remain investors’ top priority.
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PPI Mumbai Roundtable
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INDIA: PAST, PRESENT, AND FUTURE
As the world’s largest democracy, India has more than 970 million eligible voters, over 600 million of whom participated in elections held across more than one million polling stations. Once seen as lagging behind other major Asian economies, India has experienced remarkable economic growth over the past several decades.
In the first three decades following independence in 1947, India’s GDP grew at an average annual rate of approximately 3.5 percent. Growth accelerated to around 5-6 percent in the 1990s and reached 7-8 percent in more recent decades, with particularly strong performance in the years following the pandemic.
Yet India’s economic rise has not been without challenges. Inflation has picked up in recent years, while mounting fiscal pressures complicate the government’s efforts to meet the needs of a population exceeding 1.4 billion. Delivering public services across a country of this scale, with its many languages, diverse regions, and varying levels of development, remains an enormous undertaking.
India’s economic expansion has given it an increasingly significant role in the global economy. Measured on a purchasing power parity basis, India now accounts for just under 10 percent of global GDP, yet has contributed nearly 20 percent of global economic growth. Its ambitions extend well beyond its current position. Over the next two decades, India aims to become a developed nation, a transition that would require GDP per capita to rise from less than $3,000 to more than $14,000. Achieving this goal will depend on India’s ability to sustain its current pace of economic growth over the next 20 years.
India has become an exciting environment for first-generation business owners and entrepreneurs. Disruptive businesses are emerging in robotics, space exploration, and deep tech. There is a lot of confidence and aspiration for Indian business owners, and as artificial intelligence democratizes the ability to start companies with limited funding, there may be even more hope for the future.
However, with a rural population of 700 million, further development in India will likely not follow the American and Chinese models, which are solely centered on high-tech urban hubs. In rural India, development is still focused on access to education and healthcare, with a major role for non-profits and non-governmental organizations.
The global economy is undergoing a profound shift as governments take a more active role in directing investment, securing strategic industries and controlling critical resources. Decades of globalization are giving way to a more fragmented order shaped by national security, industrial policy and geopolitical alignment. For India, this presents both opportunities and challenges. Its large domestic market, expanding industrial base and strategic position could attract greater global investment, but realizing this potential will require stronger infrastructure and continued competitiveness as supply chains evolve.
AI is also reshaping the investment landscape, driving demand for semiconductors, computing power, energy, and data centers. Yet the capital and technology behind this expansion remain concentrated among a relatively small number of companies and markets. India could benefit from its technology workforce, digital capabilities, and growing demand for AI-enabled services, as well as opportunities in supporting infrastructure and supply chain diversification. Capturing a meaningful share of the value created by AI, however, will require investment in energy and digital infrastructure, access to advanced technologies, and stronger domestic capabilities. The challenge is to identify where India can develop lasting competitive advantages.
These trends raise questions about geographic diversification. The growing concentration of global capital in U.S. markets, particularly among large technology companies, has prompted investors to reassess their exposures. India offers a potential source of diversification, supported by its long-term growth ambitions. However, its investment appeal must be weighed against valuations, policy uncertainty, infrastructure constraints, and the challenge of translating economic growth into investment returns.
The central question for investors is how to distinguish between the opportunities created by these structural shifts and the expectations already reflected in asset prices. India’s growing strategic importance does not automatically translate into superior returns, just as concentration in U.S. assets does not, on its own, make diversification elsewhere attractive. Assessing India’s place in the global portfolio requires a view of how geopolitical fragmentation, technological change and capital allocation will interact, and of whether the country can translate its strategic advantages into sustained economic growth and attractive opportunities for investors.
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CAPITAL MARKETS
From 1992 to present, India’s GDP has grown from under $300 billion to over $4 trillion. Following independence, India’s early governments pursued a less business-oriented economic model, relying heavily on regulation. As policy shifted toward liberalization in the 1990s, economic growth accelerated.
Today, the Indian investor market is one of the world’s most dynamic, with 135 million unique investor accounts placing orders every day. Contrary to traditional development wisdom that suggests citizens in lower-income countries spend their wealth on necessities, making it very difficult to develop a domestic stock market, India has become a nation of savers, with an advanced stock market. India is responsible for almost half of all trades in the world on some days, using some of the world’s fastest and most complex trading software.
India does not appear content to sit on the success of previous market reforms. As markets evolve, technologies advance, and new risks emerge, regulations must similarly evolve to adapt to these new realities.
Future success requires clarity, transparent decision-making, and strong financial institutions. Secondary markets still require further strengthening, with the development of longer-term futures and options remaining a key priority.
For international investors, every dollar invested in one country is a dollar not allocated in another. In an uncertain global environment, long-term capital seeks more than a recent history of economic development, as many countries in the Global South, other than India, have experienced. Rather, long-term capital seeks credible institutions, transparent regulation, and resilient markets. Key institutional figures in India have taken responsibility for building fair, transparent, and efficient markets that inspire sustained participation.
Indian capital markets are increasingly large and sophisticated, with a domestic retail investor base that is a growing force in these exchanges. India’s 1.4-billion population has a median age of 29, with 65 percent of the population being of income-earning age. However, there remains tremendous opportunity for growth, as only 10 percent of household savings are being invested in local financial markets.
While Indian investors are becoming more active, Indian equities are becoming increasingly important to global portfolios, with foreign institutional investors having greater choice in how they access and trade the market. Mutual funds have become an increasingly popular way for both retail and institutional investors to achieve diversification, market depth, and access to Indian equities in this environment.
For global institutional investors, India has historically been underweighted as a global percentage of equities. This has begun to change, partly due to more pro-business policy frameworks supported by recent governments.
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BUILDING COMPANIES AND DOING BUSINESS IN INDIA
Doing business in India presents unique challenges and opportunities compared to other Asian markets. Many investors come to India for the macro story: its large population, rapid industrialization, and GDP growth. For some investors, however, the money is to be made on the micro: picking the right industries and businesses and only “buying what you can build.” In addition, investing in India can offer advantages over other Asian megamarkets, such as China, because it entails less geopolitical risk for North American investors. In an increasingly polarized world, India remains an attractive way to get exposure to Asia.
Driving alpha in Indian markets requires selecting the right sectors and establishing operational structures that add value. Particularly in private markets, a “builder’s mindset” is critical. In India, this means combining reliable on-the-ground experience with capable local management teams to navigate federal and local policies and run the business. Many institutional investors perceive Indian management teams as among the world’s most competent. The task is to identify a strong leader with experience creating value in similar businesses who can advance the investment agenda and help the business navigate local regulations.
Another key point in building businesses in India is defining the right metrics to focus on. Although true in all markets, focusing on the right KPIs is especially important in a complex and dynamic market like India. Building in India also means every business is, to some extent, a technology business, and getting tech transformation right can be a critical pillar.
Exiting investments in India has historically posed challenges due to limited liquidity. However, a growing investor class has expanded opportunities for initial public offerings, while Indian firms have gained greater access to international buyers. For major infrastructure projects, the Indian government has also emerged as a major player. Profitable exits still require buying the right assets at the right price and applying the builder’s mindset described above.
For investors, the challenge is to distinguish companies with genuine product differentiation and long-term potential from those benefiting primarily from favorable market conditions. Sustainable success depends on disciplined capital allocation, strong execution, a clear sense of mission, and the ability to build capable institutions. Developing globally competitive businesses will take time, but a longer investment horizon may reveal opportunities that are less apparent when judged against more mature technology markets.
In sum, India’s private equity opportunity increasingly depends on hands-on value creation: strengthening management, improving efficiency, and pursuing focused growth. Technology and AI offer further productivity gains, but success requires sector expertise, capable leadership, and disciplined execution amid regulatory and talent constraints.
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SECTORAL OPPORTUNITIES
India, still classified as a developing country, presents both tremendous challenges and opportunities for investors. One successful approach taken by some investors is to bet on the Indian consumer: as the Indian middle class grows and gains spending power, businesses catering to this segment have flourished. With over a billion consumers, India is seeing significant growth in health, technology, and consumer goods, creating opportunities for well-placed investors. The middle class’s distinct aspirations and growing willingness to spend also create a unique opportunity set for emerging businesses to develop entirely new categories and business models. These include, but are not limited to, tech companies serving the rapid rise in internet literacy and participation in India’s digital economy. As GDP continues to rise, these consumers will develop more buying power.
India’s manufacturing ambitions are gaining momentum as companies seek to diversify supply chains and expand production beyond established hubs in China. Electronics, automotive manufacturing, semiconductors, and emerging fields such as space and deep technology offer opportunities for India to strengthen its role in global industry. Progress, however, remains uneven, with manufacturing still accounting for a relatively modest share of the economy. Converting investment into sustained export growth will require more than industrial incentives and a large domestic market. Improvements in infrastructure, logistics, workforce skills, productivity and regulatory predictability will be essential to help Indian companies scale, attract multinational investment and compete internationally.
India has also become a hotbed of startup activity, with a tremendous acceleration in entrepreneurial ambition over the last 20 years. India’s startup ecosystem is entering a new phase, with founders increasingly building businesses that combine technology with deep operational expertise. Some of the most compelling innovations have emerged from addressing everyday challenges in access, affordability, and convenience, using technology to redesign service delivery and supply chain operations.
The growth of digital payments and rapid-delivery models illustrates how shared infrastructure, consumer behavior, and low-cost logistics can combine to create entirely new markets. These innovations are not simply adaptations of business models developed elsewhere; they reflect solutions tailored to India’s distinctive conditions, with potential to be applied in other emerging markets.
Looking ahead, opportunities extend beyond consumer businesses into applied AI, industrial automation, space technology, and semiconductors. India’s large pool of engineering talent, growing adoption of AI, and expanding technological capabilities provide a foundation for this next wave, even as capital requirements and gaps in research and development capacity remain important constraints.
One vulnerability in the Indian economy is its dependence on energy imports. India has a very energy-intensive economy and imports nearly all its hydrocarbons. However, this has also opened the door to domestic renewable energy projects, such as solar, a particularly useful technology in a hot and sunny country like India. Harnessing this sort of domestic energy production could be an important tailwind in the future.
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INFRASTRUCTURE AND REAL ESTATE
Historically, there has been a misconception that India was a high-risk place to invest, requiring very high risk-adjusted returns. This idea is especially misplaced when it comes to investing in Indian infrastructure. In India, the financing market is mature, with debt terms that are more conducive to infrastructure investments.
Part of the opportunity set is that India is an underserved country in terms of infrastructure. For example, India’s power consumption is one-sixth of that in OECD countries, and it has fewer airports than might be expected given its level of wealth and population. These deficiencies present significant opportunities to meet the needs of an underserved market.
From a diversification perspective, India is largely uncorrelated to American or European markets, making India an intriguing hedge against other markets. In infrastructure, investors are looking for good returns and inflation protection, both of which can be found in the Indian market. Furthermore, in India, infrastructure investment trusts have provided an excellent exit environment for investors and are here to stay.
For all the promise, India is not for the faint-hearted. India is not for the over-optimistic or the over-pessimistic investor. For example, norms in India around contracting and settling legal disputes can differ from Western markets. In addition, ESG concerns are very important to Indian infrastructure projects, where public buy-in can make or break certain projects.
India’s institutional real estate market is expanding beyond traditional residential and commercial assets, with growing opportunities in retail, hospitality, data centers, logistics, and other specialized sectors. Many of these sectors are driven by strong fundamentals and growth opportunities. As in many sectors, the scale of India’s real estate is massive; for example, India has the world’s largest market for office space, driven by growth in tech services.
The data center craze may also be headed to India. According to some analysts, India has the lowest total operating, energy, and life-cycle costs outside of China. Industrial and logistics real estate also have structural tailwinds, although the expected expansion of manufacturing and supply-chain diversification has yet to translate fully into demand.
In Indian infrastructure investing, geographic selectivity is very important: Concentrating on markets with deep demand and liquidity may be more effective than spreading capital too widely. Successful investment also depends on local knowledge, experienced operating partners, and the ability to build platforms rather than simply acquire individual assets. Importantly, the exit environment has matured, supported by growing domestic institutional capital and expanding public-market channels. These developments make large-scale investment more feasible, but disciplined underwriting, patient (yet urgent when necessary) capital, and a clear route to liquidity remain essential to building durable exposure.
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INFRASTRUCTURE AND REAL ESTATE
Historically, there has been a misconception that India was a high-risk place to invest, requiring very high risk-adjusted returns. This idea is especially misplaced when it comes to investing in Indian infrastructure. In India, the financing market is mature, with debt terms that are more conducive to infrastructure investments.
Part of the opportunity set is that India is an underserved country in terms of infrastructure. For example, India’s power consumption is one-sixth of that in OECD countries, and it has fewer airports than might be expected given its level of wealth and population. These deficiencies present significant opportunities to meet the needs of an underserved market.
From a diversification perspective, India is largely uncorrelated to American or European markets, making India an intriguing hedge against other markets. In infrastructure, investors are looking for good returns and inflation protection, both of which can be found in the Indian market. Furthermore, in India, infrastructure investment trusts have provided an excellent exit environment for investors and are here to stay.
For all the promise, India is not for the faint-hearted. India is not for the over-optimistic or the over-pessimistic investor. For example, norms in India around contracting and settling legal disputes can differ from Western markets. In addition, ESG concerns are very important to Indian infrastructure projects, where public buy-in can make or break certain projects.
India’s institutional real estate market is expanding beyond traditional residential and commercial assets, with growing opportunities in retail, hospitality, data centers, logistics, and other specialized sectors. Many of these sectors are driven by strong fundamentals and growth opportunities. As in many sectors, the scale of India’s real estate is massive; for example, India has the world’s largest market for office space, driven by growth in tech services.
The data center craze may also be headed to India. According to some analysts, India has the lowest total operating, energy, and life-cycle costs outside of China. Industrial and logistics real estate also have structural tailwinds, although the expected expansion of manufacturing and supply-chain diversification has yet to translate fully into demand.
In Indian infrastructure investing, geographic selectivity is very important: Concentrating on markets with deep demand and liquidity may be more effective than spreading capital too widely. Successful investment also depends on local knowledge, experienced operating partners, and the ability to build platforms rather than simply acquire individual assets. Importantly, the exit environment has matured, supported by growing domestic institutional capital and expanding public-market channels. These developments make large-scale investment more feasible, but disciplined underwriting, patient (yet urgent when necessary) capital, and a clear route to liquidity remain essential to building durable exposure.
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Global Institutions in Flux
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Global markets have evolved in a world dominated by the Washington Consensus, a set of governance and policy principles that promoted free markets, fiscal discipline, privatization, deregulation, trade liberalization, and openness to foreign investment as a path to economic growth. However, the international consensus has waned amid heightened geopolitical uncertainty and diminished American leadership.
Historically, the United States played a central role in shaping the international institutions that supported globalization and global capital markets. As U.S. policy priorities have evolved in recent years, other countries have increasingly reconsidered how these institutions operate and the extent to which they can continue to rely on them. This has left the rest of the world with a few options: reform the existing institutions, create new ones, or return to the pre-WWII world, in which the strong ruled by force.
Even before the recent shift in America’s posture on the global stage, multilateralism was on the rise relative to internationalism. The North Atlantic Treaty Organization (NATO), the European Union (EU), and BRICS (with Brazil, Russia, India, China, and South Africa at its core) are regional groupings that have filled gaps left by the United Nations (UN). However, multilateral coalitions of middle powers may only go so far, as all rules need a reliable enforcement mechanism, something non-superpowers have struggled to create.
Additionally, resentment has been growing among many in the Global South who feel that U.S.-led institutions have not served them. Some view the UN Security Council veto structure as creating a two-tiered world, while other emerging economies remain resentful of COVID-19 vaccine delays.
In addition, America’s ability to “go it alone” has been challenged. Failed attempts to reopen the Strait of Hormuz have raised questions about American dominance and the implications for the United States’ ability to defend allies, including Taiwan.
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War and Uncertainty
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This emerging and increasingly unstable world order has renewed investor interest in global defense spending. At the same time, advances in military strategy and technology are reshaping how defense budgets are allocated—now and in the future.
The ongoing war in Ukraine has been described as the “lab of war,” with militaries around the world watching for insights into the nature of future warfare. Ukraine is deploying approximately 10,000 drones each day, and these drones have inflicted heavy casualties on Russian forces. The widespread use of these systems has created a “death zone” where traditional military assets, such as armored vehicles, are no longer viable, forcing soldiers to seek protection underground. The conflict has also accelerated the development of anti-drone technologies, which have intercepted more than 90 percent of incoming drones. Looking ahead, the next generation of military innovation will likely include drone swarms, fully autonomous drones, and microwave-based counter-drone technologies.
Beyond driving higher defense spending across NATO countries, the war in Ukraine has also accelerated the adoption of emerging technologies and challenged the longstanding military procurement preference for maintaining legacy systems.
These new realities of warfare have raised important questions about how nation-states will interact, as technologies such as drones may have effectively leveled the playing field. Throughout history, the balance of power has shifted between offensive and defensive technologies. During the 20th century, wealthier countries held a decisive advantage because advanced weapons—tanks, fighter jets, and aircraft carriers—were expensive and required lengthy procurement cycles. As drones become the defining technology of modern conflict, however, cutting-edge military capabilities are becoming accessible to a much wider range of countries, potentially emboldening more states to engage in conflict.
The conflict in Iran has also reshaped how investors view the Gulf states. Historically, the Gulf states have been a source of capital, but they are increasingly a source of investment opportunities. Some fear that the current regional conflict may be undermining the Gulf’s value proposition as a safe place to invest. The conflict with Iran has highlighted the need for investment in infrastructure, redundancies in water production and oil transportation, and missile defense. The need for pipelines to divert oil and gas away from the chokepoint of the Strait of Hormuz has become apparent.
This conflict has had several important economic consequences, highlighting the volatility geopolitics can cause. First and foremost, other oil-producing nations, including Canada, Venezuela, and Norway, have benefited by helping offset disruptions to the global oil supply. A second-order effect has been a renewed focus on the vulnerability of strategic chokepoints like the Strait of Hormuz, prompting investors and geopolitical analysts to examine other critical chokepoints. These include geographic routes such as the Northwest Passage, as well as economic chokepoints such as China’s dominance in rare earth mineral refining, Taiwan’s central role in semiconductor manufacturing, and vulnerabilities in global fertilizer and agricultural supply chains.
Finally, the conflict has underscored the growing difficulty of predicting and pricing geopolitical events. Ongoing challenges surrounding U.S.-Iran negotiations have provided little clarity on how or when the conflict and the associated disruption to global shipping may be resolved. As a result, investors are increasingly grappling with the prospect that the international community may not return to the pre-conflict norm of largely unrestricted freedom of navigation.
From an investment perspective, investing in defense companies has long been controversial, and some investors have categorically avoided it. However, recent global events have made defense investment seem more inevitable. In addition, defense investment is increasingly understood to include critical infrastructure such as ports, rail lines, manufacturing hubs, and telecommunications and cybersecurity technologies, which may be more palatable to defense-shy investors than traditional weapons procurement.
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AI in Investing
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AI has quickly become one of the defining technologies shaping investment across nearly every industry. Increasingly, however, AI is also influencing how asset allocators make investment decisions. A central question is no longer whether to integrate AI into the investment process, but how and to what extent. At the most basic level, often described as “Level 1,” humans retain responsibility for all key tasks. At Level 2, AI serves as an advisor; at Level 3, it assists with key tasks; at Level 4, it can act as a decision-maker; and at Level 5, the human’s role is largely limited to oversight.
Some asset allocators are already deploying AI in Level 4 and, in certain applications, even Level 5 roles. In private markets, for example, AI is used to identify promising companies, evaluate investment opportunities, and help determine the optimal timing for investments and exits.
More commonly, AI is being deployed to handle work traditionally assigned to junior analysts. This has fueled concerns about a “lost generation” of talent, in which early-career employees fail to gain the experience needed to advance into senior leadership roles. In response, some companies have developed simulated projects to give junior employees foundational experience while AI handles much of their traditional work.
All asset allocators are grappling with the best ways to combine the advantages of humans and AI systems. The two key issues in this space are explainability and diagnosability. When an AI makes an investment decision, it remains critically important that the AI can explain how and why it made that decision.
Fundamentally, humans must be able to stand behind all decisions, and asset allocators are already considering ways to increase accountability and transparency in AI use. One key principle is that there must always be a “human in the loop,” or at least a “human on top of the loop,” to stand behind decisions. This is especially important in situations where people need to make judgment calls in environments with limited data or few historical examples for training models.
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AI Adoption
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Despite the incredible promise, AI adoption still faces challenges. First, people need to be trained to use the AI they are expected to use. In this regard, an AI adoption strategy can be as important as an AI strategy alone and more meaningful than traditional metrics such as AI spending. Second, the cost of AI can quickly balloon, creating problems for the bottom line. Many organizations are evaluating token usage and determining the best balance between avoiding lag and spending efficiently.
Although there is pressure to stay at the cutting edge, some organizations recognize the advantage of being a “second mover” in the AI space. Developing and deploying frontier AI models has proven incredibly expensive, while being a “fast follower” may allow some organizations to reap many of the same benefits at a lower cost.
The social and political backlash against AI has also become an important consideration for investors. For example, New York State recently announced a moratorium on building new data centers. Opposition to AI has emerged from multiple directions, with concerns about job displacement among the most prominent.
A less-discussed but equally important issue concerns the data used to train cutting-edge large language models. Much of this content is copyrighted and sourced from publicly available materials, including scientific journals, websites, music, and films. The creators whose work made these systems possible have not been compensated. As AI reshapes the global economy, asset allocators must consider the broader social and economic implications of the technologies they invest in.
Within companies, AI offers multiple avenues for value creation. On many digital platforms, AI has replaced humans in customer service interactions. AI can also make a typical employee orders of magnitude more productive; this has been most evident in software development, where some coders can be ten times more efficient than before. AI can also deliver significant cost savings by replacing consultants’ work and providing quicker, cheaper answers to key organizational questions. Furthermore, because of its labor-maximizing ability, AI has the potential to drastically reduce the cost of starting and scaling a business, allowing thinly capitalized start-ups to succeed with less outside investment.
There are also concerns about the governance structures of some leading AI tech companies. The dual-class share structure has made it difficult for investors to exercise management oversight or influence over how these companies are run. There is also concern about how long many of these emerging AI-based tech companies are spending in private markets. Not only does this limit retail investors’ opportunities to share in their growth, but staying in private markets longer may also lead to less oversight.
Although there is still tremendous uncertainty about AI’s future, asset allocators are investing for a world in which AI grows in importance, driven by both the allure of a world where AI is abundant, useful, and benevolent and the fear of missing out on the next industrial revolution.
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The Changing Nature of Infrastructure Investing
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AI has also had a profound impact on the infrastructure investment landscape. A decade ago, infrastructure investing was largely associated with traditional assets such as roads, bridges, and airports. Today, however, data centers, battery storage, and energy diversification have become defining assets of the sector.
As a result, infrastructure has evolved beyond the traditional view of a stable, inflation-hedging asset class. Many infrastructure investments now resemble operating businesses, with employees, high operating costs, and exposure to many of the same economic sensitivities as more traditional corporate investments.
This transformation is fuelling a surge in global electricity demand. AI and the rapid expansion of data centers are major drivers, alongside broader electrification trends across industries and households. Each year, global energy demand rises by roughly 1,000 terawatt-hours, equivalent to adding the annual electricity consumption of a country the size of Japan.
Renewable and nuclear energy have been key technologies for meeting this demand. For the last decade, demand for these technologies has been driven by concerns about climate change and a desire to decarbonize economies. Today, energy security and independence, particularly in Europe following Russia’s invasion of Ukraine, are increasingly the dominant narrative driving the adoption of these technologies.
Energy investment varies by region. Despite inconsistent political support for green energy solutions in the United States, the country remains an attractive place to build renewable energy projects. China continues to expand all forms of energy to meet its growing demand, including coal, renewables, and, increasingly, nuclear power. In China and other markets, small modular reactors (SMRs) are a developing technology in the nuclear sector. Because SMRs are designed to be smaller and mass-produced, they may avoid the traditional issue of nuclear megaprojects going over budget. Although still unproven at scale, SMRs are intriguing to some infrastructure investors. Across regions, policy support remains a critical factor for many green energy investors.
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Indigenous Partnership and Investment
In Canada, as in other nations with many and diverse indigenous groups, such as New Zealand and Australia, reconciliation and work with First Nations groups have become increasingly important topics for investors.
For decades, indigenous interests were ignored. Today, reconciliation requires consultation and accommodation with indigenous groups when major infrastructure projects are built on their traditional territory. Major resource projects, such as the recent Cedar LNG project in British Columbia, have involved even greater levels of indigenous ownership and oversight. In this and other examples, successful projects now require investors to understand the new rules of engagement and to partner effectively with indigenous groups.
In places like British Columbia and Alaska, the recognition of indigenous rights has advanced further, with forms of self-government granted to indigenous groups. Well-informed investors must understand these developments to work effectively in these regions.
Canada’s Strategic Advantage
Canada is blessed with abundant natural resources, a highly educated population, and a history of stable governance. In these uncertain times, Canada can benefit from being a safe place to invest.
From an energy perspective, Canada has become a leader in new SMR technology and remains committed to renewable energy. In this space, government directives have been key, as Canadian federal and provincial governments have been able to shoulder the risk that private players have been unwilling to assume.
The trade dispute with the United States has allowed Canada to diversify its trading network. Canada aims to double non-U.S. trade, particularly by exporting more potash, uranium, and critical minerals to global markets. Canada can now produce some of the world’s most emissions-efficient liquefied natural gas (LNG) and is shipping it to Asia. Canada has also taken the opportunity to sign bilateral trade agreements with other middle powers.
Canada is positioning itself as a reliable partner in an unpredictable world. Many nations prefer to buy Canadian oil rather than Russian or Middle Eastern alternatives. In this sense, Canada has benefited from recent geopolitical instability.
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India, a Paradox with Opportunity
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India is a country of striking contrasts that continues to challenge conventional assumptions. It is a diverse, fast-growing nation marked by significant inequality alongside a rapidly expanding middle class. Deeply rooted in tradition yet increasingly modern, India has surpassed some Western countries in women’s representation in business leadership and government, while still lagging in other measures of gender equality.
India’s colonial history has shaped its enduring commitment to strategic autonomy. After independence, India adopted a policy of non-alignment, maintaining ties with both the Soviet Union and the United States. This reflected a pragmatic approach among the country’s early leaders, many of whom had been prominent figures in the anti-colonial movement.
Today, India remains an important partner to Western nations while maintaining some ties with Russia. Shared strategic concerns about China’s growing influence have brought India closer to the United States. At the same time, recent strains in the U.S.-India relationship have prompted India to deepen its economic ties with other middle powers through a growing number of trade agreements.
Despite recent strains in the bilateral relationship, India and Canada continue to maintain strong economic ties. Over the past decade, Canadian pension funds have invested more than $100 billion in the Indian economy, underscoring India’s importance as a long-term investment destination. More recently, the two countries strengthened their economic relationship through a multi-billion-dollar uranium supply agreement.
India is too large to ignore as an investment destination. The country estimates it will require $22 trillion in infrastructure investment and is adding roughly $250 billion to its GDP each year. Although investors often categorize countries as either safe or risky, India’s complexity defies such simple classifications. Many Indian states have populations larger than entire European countries, each with distinct opportunities and governance challenges. As such, India cannot be viewed simply as another emerging market but as a diverse economy with a rapidly growing middle class and rising consumer spending power.
The Indian bureaucracy can be challenging for foreign investors. Although India has an extremely meritocratic bureaucracy, there remains considerable red tape, as different levels of government may delay projects for various reasons. In these cases, local expertise can be useful. However, governments are shifting toward a more pro-business mindset, with growth increasingly the primary goal.
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In Summary
Geopolitical fragmentation, artificial intelligence, and rising demand for resilient infrastructure are reshaping the landscape for long-term investors. Navigating these structural shifts while remaining disciplined in an increasingly uncertain world will be among institutional investors’ defining challenges in the years ahead.
