India needs more than just earnings to win capital, says Milken economist

India has room to attract more sustained global capital if it strengthens its institutional framework, especially around governance and legal standards, says William Lee, Chief Economist and Executive Director at the Milken Institute. He explained that innovation alone isn’t enough — investors also look for credibility, protection of capital, and a track record of honouring investments.

Countries like the United States enjoy an edge because their legal systems and governance reassure investors, even when earnings are uncertain, he said.

Lee pointed to Tesla as an example of how strong institutions can override near-term earnings concerns. He said global investors continue to back Tesla despite the company warning of volatile earnings in the coming quarters.  “He’s doing it in the United States because these institutions are there to reassure investors that corporate governance rules and legal standards are there,” Lee said.

With innovation as the main draw, capital is increasingly flowing back to the US. Lee said global investors are recognising that the US continues to be home to the most productive and technologically advanced sectors, making it a natural destination for long-term capital deployment.

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He also stated to Donald Trump’s recent speech on artificial intelligence (AI), calling it a signal that the US government is serious about backing the sector in partnership with Silicon Valley. “President Trump essentially is laying out the platform for people to come be partners with us,” Lee said.

Further, Trump’s evolving trade policy appears to reward countries that invest in the US and reduce trade barriers. Lee believes this could influence how nations align themselves economically, as seen with Japan and South Korea, both of which are working closely with the US to secure favourable trade terms.

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For the entire interview, watch the accompanying video

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