International Journal of Scientific Research and Engineering Development

Foreign Institutional Investors (FII) play a critical role in shaping capital inflows, market liquidity, and price discovery in emerging markets, particularly India. This research investigates the impact of global trade agreements and tariff policies on FII flows to Indian equity markets, using historical data spanning April 2000 to June 2025. The study employs empirical analysis of FII inflows and outflows, sectoral allocation patterns, geographic origin of investments, and market responsiveness to major trade policy announcements. Key findings reveal that India's total FDI inflows reached ₹96,78,528 crore (US$ 1.09 trillion) over 25 years, with FY25 recording ₹4,41,259 crore (US$ 50 billion)—a 13% increase from FY24. Analysis of historical episodes, including the 2008 global financial crisis and recent US tariff announcements (2024-2025), demonstrates that FII flows exhibit significant sensitivity to trade policy shifts, currency fluctuations, and risk sentiment. This research contributes to understanding the transmission channels through which global trade policy shocks propagate into emerging market capital flows, with implications for portfolio managers, policymakers, and market regulators. The study highlights that while tariff-induced volatility influences short-term FII behaviour, long-term strategic investments through institutional channels remain supported by India's demographic dividend, manufacturing growth potential, and pro-investment policy frameworks.

Saksham Bhatia, Anurag Thamke, Akshit Bharti, Harshvardhan Patil, "Impact of Global Trade Agreements and Tariff Policies on Foreign Institutional Investors (FII) in Indian Markets" International Journal of Scientific Research and Engineering Development, V8(6): Page(2494-2508) Nov-Dec 2025. ISSN: 2581-7175. www.ijsred.com. Published by Scientific and Academic Research Publishing.