MUMBAI: Though getting a job or residency visa from most of the Western world is becoming more and more difficult, our love for things foreign is getting bigger if the trend in investments into overseas assets such as stocks and real estate is any indication.
According to RBI data, it is not just the yet-to-be legalized bitcoins or cryptos that desis are investing in, they are also pumping record amounts of money to snap up property and stocks beyond desi shores, with outward flows under the liberalised remittance scheme (LRS) jumping sharply to cross $2 billion in the first nine months of this year.
Between January and September this year, LRS investments in real estate grew 80% to $350 million, while the same in equities and debt instruments jumped over 50% to $1.68 billion, according to the latest data from the RBI.
Put together, investments into these two asset overseas classes have crossed $2-billion in the nine-month period, a growth of 55% compared to the same period in 2024.
Wealth managers say the rapid shift reflects both structural as well as behavioural changes of those with money. The ongoing rapid financialisation and faster wealth creation among the affluent have broadened investment appetites, including a growing desire for global diversification. Another reason is the comparatively weaker performance of domestic equities.
A combination of muted returns at home and expanding access to global markets through technology has made international investing a mainstream part of many domestic investors’ portfolios.
It may be noted that most of the brokerages now offer investment options in overseas blue-chips while many foreign countries, especially the Middle Eastern ones in general and more so the UAE, have liberalized property ownerships norms for foreigners. For instance, Dubai now allows 99 years of free-hold for residential ownerships.
Dubai has emerged as the standout destination for desis, with proximity and familiarity being key to its dominance in LRS real estate flows. Another factor is the rising number of Indian developers in the glistening city-state, which also offers golden visas to large investors (investments worth a million dirhams).
Another reason behind the jump is the pursuit of education abroad by students whose tuition and living expenses are transferred under the LRS window, though the numbers to most of the preferred Western destinations like the US, Canada and UK have been declining as these markets no longer offer the benefits they used to earlier.
In 2024, Indian students spent around Rs 29,000 crore abroad (remitted through official channels alone). As many as 7.6 lakh Indian students went abroad in 2024, down 15% from the 2023 peak when 8.95 lakh went out, taking the total number of our students pursuing higher education in various international institutions to over 1.3 million.
There was a significant drop in new student numbers in Canada (41%), UK (28%) and the US (13%) compared to 2023, while new destinations which are more affordable and immigration-friendly include Germany, France, Russia and the UAE.
Then there are residency-linked investment programmes such as the EB-5 visa programme in the US and the golden visa schemes in various countries contributing to the spike in LRS outflows.