Capital market investments in India need greater diversification across sectors and geographies, for which investors need to take a more “realistic” approach to assessing and managing risks, according to Alok Tiwari, Joint Secretary, Department of Economic Affairs.

Addressing the FICCI Capital Market event in Mumbai, Tiwari said investment was currently concentrated in a limited number of sectors and regions, leaving several parts of the country starved of capital despite offering potentially attractive returns.

“I have a suspicion that too much of investment is concentrated in too few sectors and too few geographies of India,” he said, adding that several sectors and regions could deliver good returns if investors were willing to “realistically assess the risks involved.”

Calling for a shift in both policy and investor behaviour towards risk assessment, he said risks should be confronted and accurately evaluated rather than ignored or “wished away.”

According to Tiwari, investments have not reached several areas because investors have either systematically overestimated the risks or failed to develop financial instruments capable of mitigating those risks.

He said the broader concept of risk should encompass not only the nature of market participants but also the flexibility of financial markets and the availability of instruments to manage exposure.

Drawing on his experience with the International Finance Corporation (IFC), Tiwari said global investment companies had often stayed away from parts of Africa because they overestimated the risk of default, thereby missing opportunities to earn returns from investments in those markets.

Tiwari called for the development of more investment avenues and financial products that can help channel capital into underinvested sectors and regions.

Published - August 19, 2026 08:24 pm IST