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## Overview Global funds are exiting Indian equities at a record pace as the energy shock from the US-Iran war threatens to derail India's economic outlook, according to Bloomberg (April 11). India, described as the world's fastest-growing major economy, faces particular vulnerability due to its heavy dependence on energy imports. ## Drivers of the Selloff - **Energy import costs:** India imports approximately 85% of its crude oil, making it acutely exposed to Iran war-driven price surges - **Fiscal pressure:** Higher fuel costs strain government subsidies and the current account deficit - **India Fuel Export Duty Hike:** India's recent diesel and ATF export duty increases (existing page) reflect domestic policy responses that further complicate the investment picture - **Growth forecast downgrades:** Analysts are revising India GDP growth projections downward ## Market Structure Implications - Record foreign institutional investor (FII) outflows create rupee depreciation pressure - Equity market liquidity conditions are deteriorating for Indian-listed companies - Domestic institutional investors (DIIs) may not be able to fully absorb foreign selling ## Strategic Importance For fund managers, corporate counsel advising on India market entry, and trade lawyers, the record outflow pace signals a potential inflection point in India's decade-long run as a preferred emerging market destination. The energy shock's impact on India is a distinct and developing story within the broader Iran war economic narrative. ## Open Questions - Whether outflows will stabilize if Islamabad peace talks progress - RBI intervention options to support the rupee - Impact on India's infrastructure financing and foreign direct investment pipeline