With Indian equity markets entering a prolonged phase of tepid growth, investors are increasingly looking overseas to diversify their portfolios. Latest data from the Reserve Bank of India (RBI) suggest that investors are stepping up overseas allocations through both equity and debt investments.
According to RBI data, overseas equity and debt investments under the Liberalised Remittance Scheme (LRS) rose 56% in FY26 to $2.65 billion from $1.7 billion in the previous financial year. Over the past five years, overseas equity and debt investments under the LRS have increased 5.6 times, while over the past decade they have risen 8.3 times.
Under the LRS framework, resident individuals, including minors, are allowed to remit up to $250,000 per financial year outside India for permissible current or capital account transactions.
Indian equity markets have underperformed several global peers over the past two to three years. In the past one year, Indian markets have been among the few major markets to deliver negative returns. In contrast, markets such as the US, China, Japan, South Korea and Taiwan have generated returns ranging from 20% to 200%. The Nifty50 and BSE Sensex have delivered negative returns of 5% and 7%, respectively, over the past year.
Persistent rupee depreciation over the last few years has also strengthened the case for overseas investing.
According to Swarup Mohanty, vice-chairman and CEO of Mirae Asset Investment Managers, global diversification makes strong strategic sense. “India represents only around 3–3.5% of global equity markets. Many world-leading businesses and sectors are still not available in India at scale. Currency diversification also matters,” he said, adding that the rupee has historically depreciated gradually over time and owning assets denominated in foreign currencies can provide portfolio balance.
Indian investors can access overseas markets directly through international brokerages or indirectly through mutual funds, including both active and passive schemes. One advantage of investing globally through Indian mutual funds is that such investments are not counted within the LRS remittance limit of $250,000 a year. However, mutual funds currently face regulatory caps on overseas investments.
The Securities and Exchange Board of India (SEBI) permits mutual funds to make overseas investments of up to $1 billion per fund house within an overall industry limit of $7 billion. However, the industry-wide overseas investment limit prescribed by the RBI has already been fully utilised.
A new and increasingly popular route for Indians looking to invest globally is through GIFT City, India’s international financial services centre. The framework allows resident Indians to access foreign assets such as overseas stocks, bonds and mutual funds through Indian brokers under what is known as the Outbound GIFT City route. Since the mechanism operates within the Indian regulatory ecosystem, it offers a relatively simpler compliance structure compared with direct overseas investing. In addition, investments through GIFT City are considered tax-efficient. Investors only need to open a GIFT City trading account to gain exposure to global investment opportunities.