India has slipped to seventh place in global market-capitalisation rankings after South Korea overtook it, just a week after Taiwan moved ahead. The rally in the market value of the two Asian chipmaking hubs, fuelled by investor enthusiasm for companies benefiting from the global artificial intelligence (AI) boom, has pushed India down from the fourth position it had attained in 2024.
According to Bloomberg data, the combined market capitalisation of listed companies in Taiwan and South Korea stands at just over $5 trillion each, compared with $4.84 trillion for India.
India’s relatively stark underperformance reflects not only its limited exposure to the AI supply chain but also domestic macroeconomic headwinds, including elevated crude oil prices, a weakening rupee, relatively weak earnings growth and sustained foreign portfolio investor outflows.
“What’s driving global growth right now is a massive AI-led investment cycle — particularly around data centres, semiconductors, memory chips, energy infrastructure and construction. India is not yet fully integrated into this AI supply chain, which means it is not participating in the growth impulse to the same extent,” said Ridham Desai, managing director and chief equity strategist (India) at Morgan Stanley.
The absence of a meaningful semiconductor ecosystem has also left India on the sidelines of what many investors view as the defining investment theme of the decade.
“Within the EM universe, semiconductors are the domain of Taiwan and Korea. India has none. Therefore, India has no meaningful role in the most transformative cycle since the internet boom — and its equity market, viewed through the prism of the Nifty 50 index, reflects that absence,” said Abhay Laijawala, managing director and chief investment officer (India) at Lighthouse Canton.
