The India Allocation Case
Why CPPIB Doubled Down on India While Diplomats Walked Out
In the fall of 2023, Canada and India had a full-scale diplomatic breakdown. The Canadian Prime Minister publicly accused India’s government of orchestrating the killing of a separatist activist in British Columbia. Delhi denied the claim, expelled diplomats, suspended visas, and paused trade negotiations. Ottawa matched the moves, withdrawing staff and suspending trade talks. Political engagement ground to a halt.
Amid this, something else happened. Canada’s largest investor doubled down on its India strategy. The Canada Pension Plan Investment Board (CPPIB), which manages over C$630 billion in retirement assets, increased its exposure to India. By early 2024, CPPIB’s India allocation reached a record C$28 billion (₹1.7 trillion) - positioning India as one of its largest geographic exposures outside North America.
The expansion was anything but subtle. In the following March, CPPIB invested C$297 million in India’s National Highways Infra Trust, taking its total commitment there to C$614 million. It followed this with a C$540 million investment into IndInfravit Trust, another toll-road platform, raising its stake to a controlling 60.8%. Around the same time, it backed 1.2 gigawatts of solar and wind capacity across five Indian states through a C$187 million investment with Enfinity Global.
In parallel, it exited Delhivery - one of its earlier bets on India’s logistics sector - and trimmed its position in Kotak Mahindra Bank, releasing around ₹8,500 crore in proceeds. It was capital rotation: pulling out of some sectors, doubling down on others.
India’s government, for its part, didn’t block any of this. Indirect signals went out to Canadian investors: your capital is safe. Diplomatic conflict stays in the diplomatic channel. Business as usual otherwise.
Deals closed. Prompt approvals came through. Projects moved forward.
CPPIB wasn't an outlier in this. Brookfield Asset Management has over $7 billion deployed in India across real estate, data centers, and renewables - and remained active. CDPQ (Caisse de dépôt et placement du Québec) continues its investments in Indian roads, renewables, and credit platforms. OMERS is also building its exposure through structured credit mandates.
Collectively, Canadian pension funds manage over $75 billion in Indian assets. None of them have made public moves to reduce their exposure since the diplomatic crisis began. This tells you everything about how sophisticated institutions interpret political chaos.
The India–Canada situation isn’t unique. It reflects a broader pattern: capital navigates political tension by focusing on durable fundamentals and structure. For example, after years of hostility, UAE sovereign investors like ADQ committed over $50 billion to Turkish assets - logistics, fintech, ports, energy - in 2023. The capital flow often preceded the political thaw. Politics matters, but only when it affects the fundamentals.
India is an important piece.
“Our emerging markets investments have evolved over time. The opportunity set is not as big as it once was. When it comes to emerging markets, we want to be in the larger markets that have scale,” John said, pointing to India.
John Graham, CEO of Canada Pension Plan Investment Board, during a Bloomberg Television interview in London (June 2024).
Big funds - pension, sovereign, or otherwise - answer to math and mandates.
Their India appeal isn’t complicated. It offers what most other large emerging markets can’t: a combination of scale, legal infrastructure, domestic growth, and working capital markets, layered on top of a digitizing, formalizing economy. It’s not risk-free, but the risks are known. And more importantly, priceable.
The digital infrastructure is unmatched. UPI processes over 11 billion transactions per month. Aadhaar provides biometric ID to more than a billion people. These systems lower costs, reduce friction, and expand reach - not just for payments companies, but for logistics, e-commerce, and even insurance - making them scalable and investible.
That infrastructure is mirrored in the capital markets. InvITs like NHIT and IndInfravit offer institutional-grade exposure to stabilized, cash-flowing assets. They’re not novel products. They’ve been around for years. Distributions are backed by contract, and underlying assets are backed by the state. These vehicles allow large investors like CPPIB to deploy at scale with defined yield and governance rights. Legal enforcement is imperfect, but functional. SEBI and RBI are credible.
There’s also the macro story. India will surpass China in population this decade. Its labor force is younger, and its income growth trajectory is less constrained. Capital inflows are supported by a current account deficit that’s financed, and FX reserves exceed $690 billion. Inflation is controlled. The rupee has been stable.
More importantly, India can absorb size. For allocators rebalancing away from China, few other countries fit the bill for multi-billion-dollar allocations.
Fundraising on the India Story
Your potential LPs see the headlines. India is juggling U.S. tariff threats, a diplomatic freeze with Canada, unresolved border issues with China, and periodic flare-ups with Pakistan. But if you’re raising capital for an India-focused fund, the message to deliver is simple: none of this has stopped capital from coming in.
As a GP, your job is to demonstrate whether the headlines affect your ability to deploy, protect, and return capital. And right now, they don’t.
Start by acknowledging the optics, if LPs ask. But then move quickly to structure. India’s financial architecture allows for guardrails. You can deploy through InvITs and REITs with contractual yields and SEBI oversight. You can secure JV governance, enforceable board rights, and downside protection. INR risk can be hedged. On-ground execution is real, local, and improving. SEBI and RBI continue to function with credibility and consistency.
Then move to precedent. This isn’t theoretical. In Q1 2025 - at the height of Canada–India diplomatic tensions - CPPIB committed another C$350 million to its toll road platform. In April, ADIA put $300 million into IDFC First Bank. Temasek has announced plans to reallocate $10 billion from China to India over three years. These are sovereign and pension capital flows with long durations and hard risk thresholds - factors that add to LP confidence.
The U.S.–India situation? Yes, there are tariff threats. But a 90-day truce is in place, and negotiations for a first-phase trade deal are underway. Both governments have committed to a $500 billion trade target by 2030. U.S. investor sentiment is stabilizing. PE and strategic flows continue, particularly into sectors like clean energy, manufacturing, and AI. Institutional behaviour is always a better indicator.
With China, the dynamics are more nuanced. India–China trade continues to grow, even as diplomatic issues persist. But capital channels from China into India are effectively frozen. India is actively diversifying its inbound capital base - Gulf, U.S., ASEAN - and that’s a structural advantage for foreign LPs. You’re not exposed to Chinese capital contagion, and you benefit from supply chain realignment.
Canada’s relationship with India remains diplomatically frozen, but capital hasn’t flinched. CPPIB, CDPQ, Brookfield, Fairfax, and Ontario Teachers’ are all active. New deals, new commitments, no visible retreat.
In fact, some of the most aggressive scaling is now coming from the Gulf. ADIA has launched a dedicated $4–5 billion India fund from GIFT City - the first of its kind. Saudi’s PIF is lining up tax exemptions for infra investments. UAE–India CEPA is already driving billions in trade and investment into logistics, food security, and renewables. This is sovereign anchor capital - patient, long-horizon, and increasingly central to India’s FDI mix.
Even Pakistan, long viewed as a wildcard, poses no material investment risk. The recent war threat caused no capital disruption. There’s no trade relationship, no FDI, no channel for contagion. Unless it escalates into full-scale war (an outcome markets have repeatedly priced as low probability), this is not a capital event.
So when LPs bring up geopolitics, the right response is factual. Your fund is structured to withstand macro and political noise. It aligns with how serious, sovereign-scale capital is behaving. And it’s able to deploy at size, with discipline and repeatability.