Is India an emerging or advanced market?

India-based GC Legend, Viraj Kulkarni, founder and CEO, Pivot Management Consultancy, Asia’s largest consultant in the custody space, examines which label is most appropriate for the country’s fast evolving capital market activity.

Is India already an advanced market, simply awaiting acknowledgement? Let’s look at some of pointers.

The numbers look flattering with regard to the attractiveness of the Indian capital markets. Their significance grows when one considers that it took 60 years from Independence in 1947 for India to become a $1 trillion economy, but the next $2.3 trillion came in 15 years. India aims to be a $10 trillion economy by 2035!

The collective strength of political stability, initiatives of the Finance Ministry, the focus of regulators (RBI, SEBI, IFSCA), and active participation of market infrastructures, intermediaries and Investors all contributed to wealth creation and outcomes already achieved or anticipated in the run up to 2035.


A snapshot of some of the key drivers that have contributed to the growth and visibility of Indian capital markets and thereby advanced India’s case to be recognised as an advanced market are : T+1; AIF growth; increased investor base; digitisation; global recognition and participation; and GIFT City, among others. Let’s consider these in turn.

T+1: Indian capital markets have emerged from being viewed as follower markets to a leadership position. The “risky market” perception of the early 2000’s has given way to a view of opportunities and competitiveness. The percentage of fails (including cross-border) returned to pre-T+1 levels even as trade volumes almost doubled. The US plans to introduce T+1 next year, while in European markets (many much smaller than the Indian market and less complex) the debate is picking up!

AIF: The AIF segment has recorded compound growth of 38% year-on-year (maintaining its lead as the world’s fastest growing AIF segment). AIFs number over 1100. Interestingly 60% of the commitment is from domestic investors. AIF is the best possible source for early stage capital, fuelling economic and social development (jobs, revenue, industry etc). The segment will witness significant reduction in risks, thereby become more attractive, as AIF units go into DEMAT mode soon. This should see a further influx of capital and greater liquidity.

UPI, UPI blocking T+3 for IPO: The Unified Payment Interface (UPI) approved by RBI and the SEBI induced extension of UPI blocking T+3 for IPOs are significant developments that have led to increased liquidity, lower cost of doing business and greater participation.

Increase in investor base: Over 40 million Demat accounts were added by CDSL in a span of two years, leading CDSL to be the fastest growing and largest depository by numbers of accounts (approx.88 million). Recognised as Asia’s leading depository for Leadership in Innovation at the GC Asia event, it is a new high for Indian market infrastructure institutions (MIIs). The growth in number of Demat accounts (over 110 million across CDSL and NSDL) signifies, amongst other things, a greater ease of account opening, tech-driven solutions and better risk management. Numbers could potentially rise to 170 million accounts over the next decade. The investment cult is rapidly growing.

Fast paced reforms: One perception is that fast-paced reform, mainly by the regulators, is painful. The positive aspect is, maybe they were overdue and were needed to de-risk the market. None can take away the fact that markets grew in the new change scenario. In my view, the growing resistance in Europe to T+1 is not only unusual but also restricts growth. Change is here to stay. The challenge is when it is introduced at short notice! The record number of consultation papers that SEBI has put out in the last one year has no parallel of engagement with industry and investors alike.

GIFT CITY: GIFT NIFTY trading at NSE IX is expected to make GIFT City more visible and increasingly attractive. The growing number of entities (including ADIA) registered across multiple segments adds to the confidence that it will soon be a jurisdiction to reckon with. GIFT City will add revenues and be a viable jurisdiction, while supporting growth of India’s domestic markets.

Single country custodians: India has five. ICICI Bank is the largest single country custodian (SCC) by assets and also the third largest amongst the 18 custodians in India. SCCs over the last decade have improved to provide a high degree of local market expertise, competitive products and services, cutting edge tech solutions and thought leadership. Many of them are top rated in global surveys and are increasingly winning business, both local and cross border.

Awards and recognition: India and Asia related awards and recognition by global entities such as Global Custodian, Asset Servicing Times, Asia Asset Management, FOW, The Asset, Global Finance and Regulation Asia are increasingly bagged by Indian Institutions, which have emerged to be present alongside their global peers. This significantly increases the visibility of India and Indian entities. HDFC Bank recently vaulted into the Top Five banks globally!

Globally visible: The active participation of Indian MIIs, such as NSE, NCL, CDSL, BSE,ICCL, and intermediaries like ICICI, SHCIL, SBI-SG, BNP Paribas, Deutsche, and PIVOT in global bodies such as IOSCO, SIBOS, WFE, FIA, ISSA, Global Custodian, TSSAG, TNF, Cyprus International Summit, and FOW as panellists, committee members or attendees has added to the visibility of the attractive India story. The India story becomes more visible when India integrates more with the global fraternity.

Digitisation and consolidation: The scale and speed India has achieved in growth through digitisation combined with UPI rollout has few parallels worldwide. Besides derisking the market, it has increased the ease of doing business, ensured higher compliance standards, greater STP, and paved the way for consolidations while increasing the reach to the remotest geographic locations or to investors in very different time zones.

Investment in training: In the 2023 Budget, the Honourable Finance Minister of India announced an increased thrust on training through SEBI-certified courses. In my view, over 200,000 trained resources are needed to address the needs of the Indian capital market every year, beside addressing the re-skilling needs through training. At PIVOT we introduced training modules that very shortly became very popular. Training will add to greater ownership, effective productivity and faster growth. The initiatives of NISM, NSE Academy and BSE Training Institute are commendable.

Social media: Increased use of social media such as X (Twitter) and LinkedIn by regulators, MIIs, investors, press and intermediaries has added new dimensions of information sharing and reach, inviting inputs, learning and thoughtsharing.

Cybersecurity: As the wealth of the nation increases, the continuous investment in cybersecurity measures by the MIIs under the watchful guidance of the regulators has been an important development in better managing the markets. Likewise, investments in the said space by the various stakeholders connected with the MII or otherwise (custodians, banks, brokerages, etc) is improving investor confidence. Regulators and MIIs have actively engaged with investors with regard to cybersecurity information dissemination.

Wealth and asset creation: As recent investment bank reports indicate, wealth creation is on the rise in India. This has encouraged new differentiated products developed for the discerning wealth segment.

Globally recognised conventions: Increasingly a large number of Asian and global conventions have dedicated India panels at their forums. This hardly existed in the past. A combination of India and GIFT CITY markets could be an interesting proposition for holding an India Convention in India. India offers an interesting diversity of topics from its own experience: T+1. digitisation, cybersecurity, UPI and AIFs , to name a few. This will add to the diversity of knowledge, enable better interaction and visibility to say the least.

Client centricity by MIIs: Increasingly MIIs are focussing on client centric solutions. Differentiated technology solutions, differentiated products and services, industry engagement, and participation in industry bodies are adding value to clients and the ecosystem. This is in addition to meeting the mandatory regulatory driven engagements. Investors prefer doing business with those who provide value added services. No longer is it about living with what one is offered.

Trusteeship and fund administration: The clarity by SEBI on the role of trustees has also led to greater good, though one can say that trustees in India are doing much more than what their counterparts are doing. As the mutual fund segment grows in size, it’s time to introduce a global practice: a regulated fund administrator. This would enable trustees to do what they are best at and leave the professional expertise to a segregated set.

SOPS and cost of doing business: Increased focus on standard operating procedures (SOPs) is merited. If SOPs are Industrialised with regard to certain operational aspects, then it leads to greater good. The SEBI driven initiative to have uniform SOPs with regard to onboarding eliminates many issues faced by inflow investors. Purposes are well served when also considering the requirements and challenges of the 3000-odd FPI investors who may not necessarily come through global custodians or are not SWIFT-enabled.

Strategic alliances: This will increasingly gain over the next decade, bringing better practices, tech driven solutions, reduce inefficiencies and enable the use of DLT and AI in financial markets.

ESMA standoff: Indian clearing houses are more advanced than many Europe-based ones. Indian regulators did well in not agreeing to ESMA requiring Indian clearing houses to be registered with it. ESMA can encourage its clearing houses to adopt the efficient practices of Indian clearing houses.

Factsheets by government: Factsheets of consolidated information, a practice during the late 2000s, can be shared regularly to the benefit of all the Investors. These are much needed, given that there is no one source of information.

To conclude, India as a nation has looked beyond the issues that dogged us and has marched into leadership roles with greater and growing confidence. India has de facto emerged from being an emerging market to being considered as an advanced market. Labels can follow.