Indian investors are significantly increasing their exposure to international financial markets, channeling billions of dollars overseas in search of higher returns and portfolio diversification. Fresh data from the Reserve Bank of India (RBI) highlights a sharp 54.5 per cent rise in outward remittances under the Liberalised Remittance Scheme (LRS) in the first ten months of 2025, underscoring a major shift in investment preferences.
RBI Data Reveals a Surge in Global Investments
According to the central bank's figures, Indian residents invested a substantial $1.959 billion (over Rs 17,000 crore) in overseas equity and debt between January and October 2025. This marks a significant jump from the $1.268 billion sent abroad in the same period last year. The momentum accelerated notably in the latter part of the year, with investments doubling to $278 million in September and $273 million in October, compared to $135 million and $149 million in the corresponding months of 2024.
Market analysts attribute this spike to the robust performance of US equity markets, particularly following the return of Donald Trump to the US presidency, which renewed interest in technology stocks. This trend stands in contrast to the domestic scenario, where foreign portfolio investors (FPIs) have withdrawn a net Rs 86,960 crore (approximately $9.66 billion) from Indian markets so far in 2025.
The Performance Gap Driving the Flow
The primary catalyst for this capital flight appears to be the stark difference in returns between global and Indian indices. As of December 22, 2025, the technology-heavy Nasdaq Composite in the US has delivered impressive returns of around 21 per cent this calendar year. In comparison, India's benchmark BSE Sensex has managed a more modest gain of 9.4 per cent over the same timeframe.
This performance gap has prompted Indian retail and high-net-worth individuals to look beyond domestic shores. The LRS framework, which permits individuals to remit up to $250,000 per financial year for approved transactions, has become the essential conduit for these investments. These funds are primarily deployed into foreign equities, exchange-traded funds (ETFs), bonds, and mutual funds.
How Indians Are Investing Overseas
Indian retail investors typically access international markets through two main routes:
- Fund-of-Funds (FoF): This is the most popular method, where investors buy into domestic mutual fund schemes that, in turn, invest in underlying US mutual funds or ETFs tracking indices like the S&P 500 or Nasdaq. This rupee-denominated route is seen as simpler and more convenient, avoiding the need to manage overseas brokerage accounts.
- Direct Stock Purchases: Increasingly, affluent and tech-savvy investors are buying shares of global giants like Apple, Microsoft, Amazon, and Nvidia directly. This is done either through Indian brokerage platforms with international partnerships or by using the LRS route to open accounts with foreign brokers.
Additionally, investors can access US stocks via the GIFT City in Ahmedabad by purchasing Unsponsored Depositary Receipts (UDRs) on the NSE IX or through platforms on the India INX.
Experts Advise Caution Amid the Rush
While the trend is gaining momentum, financial experts urge investors to be mindful of the inherent risks. Global markets, especially tech-focused ones, can be highly volatile, influenced by shifts in inflation, interest rates, and geopolitical tensions. Currency fluctuation is another critical factor; a strengthening rupee against the dollar can erode foreign investment returns when converted back.
Investors must also navigate the complexities of taxation on overseas income, including capital gains and dividends, and adhere to the regulatory limits of the LRS. Despite these challenges, the steady rise in outward investments signals a maturing Indian investor base that is strategically integrating global assets into their portfolios for long-term growth and diversification.
If the outperformance of global markets persists and regulatory support continues, this trend of Indian capital seeking opportunities abroad is likely to strengthen further in the coming months.
