Critical elements that shape the new growth curve of capital markets

Last week the Ficci organized a day -long capital marking conference. There was a uniform image that our markets enter their next phase of growth. The most important question was: what are the elements that will form this new growth curve? In this article I will discuss some of the pillars that will stimulate this next phase.

In the past three decades, the stock markets of India have emerged as some of the most liquid, dynamic and important in the world. From the end of 2024 our market capitalization had surpassed around $ 5.1 trillion. A dramatic transformation have seen in recent years. Since 2019, the number of DEMAT accounts has risen from 40 million to more than 150 million against mid-2024-a almost fourfold increase. Retail participation has been further strengthened by the rise of SIPs (systematic investment plans) and the rapid expansion of the investment fund industry, which now reaches smaller towns and villages.

In the next five to seven years, the markets are expected to double in size. This growth will be driven by the overall economic expansion and the formalization of the economy, which is expected to channel $ 7-12 trillion savings in the financial sector in the following decade. A significant part of this is likely to flow into our established capital markets. To constructively channel this growth, I believe that we should concentrate on a few critical areas.

Deepening the secondary stock market with different products

Over the years, the stock markets of India have become considerably mature. To absorb the growing streams in the market, we must expand the product suite. This includes ETFs, index funds, reit’s and invites, which will help create a stronger, more including investment landscape.

ETFs and index funds: assets in management (AUM) in ETFs have risen more than five times since 2020. Yet ETF penetration in India remains considerably among the worldwide benchmarks. These cheap, passive products can deepen the participation and broaden access. Further diversification in activa classes such as gold, silver, raw materials and other financial instruments can improve the resilience of the market.

Reits and Invits: The combined AUM from Invit and Reit’s has risen to almost $ 100 billion in FY2025, more than doubled in just five years. Invites account for around 75% of this pool. Worldwide, Reit’s and Invits manage more than $ 2 trillion in assets. In India, however, Reit’s only about 10% of the total listed real estate value – comparable to more than 90% in developed markets such as the US and the UK. This gap indicates a huge growth potential. Reit’s and Invites evolve into regular financing platforms for infrastructure and real estate. Their scope expands further than traditional office and road assets to new segments such as warehouses, hotels, hospitals, telecom towers, renewable energy and digital infrastructure. With policy support-such as small and medium-sized REITs, higher investment limits for investment funds and share-like classifications can reach the sector wider access to investors and liquidity. It is a necessary.

Stablecoins: the next wave of fintech -innovation

The Genius Act in the US has given Stablecoins global legitimacy by obliging 1: 1 to oblige support with cash, ensure transparency and aml, and prioritize holders in bankruptcy. This bold movement pushes Stablecoins from the crypto edge into regular financing.

The fintech eco system of India, built on a robust digital public infrastructure (Aadhaar, UPI, account aggregator, IMS, Neft, RTGS), can take a similar framework. By regulating permitted emptents, enforcing full spare backing and obliging regular audits and disclosures, India can create a safe, scalable and regulated Stablecoin environment in addition to its digital rupid initiative.

At the same time, making the trade of traditional illiquid assets on digital platforms can unlock productivity and broaden financial participation.

A uniform legal coordination framework for faster decision -making

Currently, legal coordination in the financial sector is under the supervision of the Financial Stability and Development Council (FSDC), including the RBI and SEBI, but is missing the crucial participation of the Ministry of Corporate Affairs (MCA). Given the crucial role of the MCA in Corporate Governance, it can be on its way to a more uniform forum that includes the MCA in addition to the RBI and Sebi, helping to create an extensive and coherent supervisory mechanism, which covers the business law, banking and capital markets.

Such a scheme can help to reduce lacunes and overlap of regulations and improve coordination between authorities, make it possible to make more timely reactions to emerging risks and to increase supervision of areas such as Fintech, Corporate Governance and Risk determination. This integrated regulatory framework could further support through continuous reforms and the financial ecosystem of India can help to adapt to fast market developments.