Complex elements shaping the new growth curve of capital markets

Last week, FICCI organized a long capital market conference one day. There was a similar view that our markets are entering the next phase of their development. The main question was: What are the elements that shape this new development curve? In this article, I will discuss some pillars that run this next stage.

In the last three decades, India’s stock markets have emerged as some of the world’s most fluid, dynamic and noticeable. By the end of 2024, our market capitalization surpassed about $ 5.1 trillion. There has been a dramatic change in the last few years. Since 2019, the number of demat accounts has increased from 40 million to 150 million by mid-2024-four times a four-fold increase. The rise of SIP (systematic investment plans) and the rapid expansion of the mutual fund industry has strengthened the retail partnership, which is now reaching small cities and towns.

In the next five to seven years, the size of the markets is expected to double. The growth will be run by overall economic expansion and formal prescription of the economy, which is expected to save $ 1 trillion in the financial sector in the next decade. A significant portion of this will flow into our well -established capital markets. To channel this growth creatively, I believe we need to focus on some critical areas.

Intensify the secondary equity market with different products

Over the years, there has been significant maturity in India’s equity markets. To absorb the growing flow in the market, we should expand the product suit. These include ETFs, index funds, REITs and invitations, which will help create a stronger, more comprehensive investment landscape.

ETF and Index Funds: Property under management (AUM) in ETF has increased more than five times from 2020. Nevertheless, ETF penetration in India is significant below the global benchmark. At this low cost, passage of passive products and further enhanced entrance. Can make. More diversification in asset categories such as gold, silver, goods and other financial instruments can increase the elasticity of the market.

Reits and Invitations: The combined AUM of invitations and reits has been almost $ 100 billion in FY 2025, which is more than twice in just five years. This invites about 75% of the pool. Globally, the reits and invitations manage assets over $ 2 trillion. In India, however, RITS covers about 10% of the total listed real estate value – more than 90% of developed markets like the US and the UK. This distance indicates the possibility of huge growth.

Reits and invitations are developing in the mainstream financing platform for infrastructure and real estate. Their scope is expanding to the new segments beyond the traditional OFFICE Fissure and road wealth, such as warehouses, hotels, hospitals, telecom towers, renewable energies and digital infrastructure. Classification of policy support, such as small and medium RIITs, high mutual fund partnership limit and equity-can achieve widely accesses and fluid of widespread investors.

Given the requirements of India’s infrastructure, more development of these platforms is not just a chance; It is a must.

Stablecoins: the next wave of Fintk Innovation

US In the Genius Act, supporting 1: 1 with liquid wealth, transparency and AML have given global legality of stability by ensuring Safeguards and prioritizing the holders in bankruptcy. This bold movie pushes the stabilocoins from the crypto fringe to the mainstream finance.

India’s Fintech ecosystem, built on a strong digital public structural (Aadhaar, UPI, Account Aggrigator, Imps, NEFT, RTG), can adopt the same structure. India can create a safe, scalable and regulatory stablecoin environment along with its digital rupee initiative, by regulating permissible issues, applying full reserved baking, and mandating regular ITS dets and ads.

In parallel, enabling traditionally liquid wealth trade on the digital platform can make productivity unalwed and expand the financial partnership.

A consolidated regulatory coordination structure to make a quick decision

Currently, the regulatory coordination in the financial sector is monitored by the Council of Financial Stability and Development (FSDC), which includes RBI and SEBI but lacks the critical partnership of corporate affairs (MCAs). Given the crucial role of the MCA in corporate governance, moving towards more unified forums, including the MCA along with the RBI and SEBI, can help create a comprehensive and relevant inspection method covering corporate laws, banking supervision and capital markets.

Such arrangements can enable more timely answers to reducing regulatory gaps and overlaps, improving inter-agency coordination, more timely answers to emerging risks, and increasing monitoring in areas such as Fintk, Corporate Governance and Risk Notification. This integrated regulatory framework can further support the ongoing reforms and help India’s financial ecosystem fit the fast market growth.