Data under the Liberalised Remittance Scheme (LRS) shows a sharp acceleration in capital-led overseas investments, with equity and debt outflows more than doubling year-on-year even as traditional consumption-related remittances moderate.
According to Dr. Karthik S, Head of Family Office Investment Advisory at Entrust Family Office, this shift reflects the growing maturity of Indian portfolios, rising currency awareness, and the desire to participate in global growth themes and markets that are outperforming local indices. Edited Excerpts –
Q) Global investing has become popular in the past few years, especially in India. What does data suggest? The growth is seen in the number of investors opting for global diversification.
A) The investment landscape for Indian residents is undergoing a fundamental and accelerating transformation, characterized by a strategic shift toward global asset diversification. The data on the Liberalised Remittance Scheme (LRS) clearly supports this trend.
Between FY20 to FY24 total LRS outflows surged by nearly 69%, from $18.75 Billion in FY20 to a record $31.73 Billion in FY24, marking a consistent increase in outbound capital.
In the first half of the current fiscal year (April – September 2025), total LRS remittances stood at $29.56 Billion, indicating a 7% Year-over-Year (YoY) decline. This moderation is largely attributed to reduced spending in traditional, consumption-led categories like travel and education.
The most compelling data point is the performance of the capital-led categories. Outflow specifically for international investment in equity and debt has more than doubled (over 100% growth) year-over-year in recent months.
This demonstrates that regardless of slower consumer spending the strategic deployment of capital into global assets is accelerating.
The $250,000 annual limit is being utilized by a wider base, including High Net-Worth Individuals (HNIs) and increasingly, the upper-middle class, thanks to the ease of use provided by digital investment platforms. The growing prominence of GIFT is expected to further institutionalize this trend.
Q) As we step in 2026 – are you seeing a noticeable rise in outbound investments queries from your clients despite domestic markets hitting record highs?
A) As lot of our client families become global families, real diversification must consider geographical and currency level allocation. Additionally, the depreciation of rupee and growth in some of the international markets has been a strong factor for families to consider investing internationally.
For E.g. in the last 1 year, Hang Seng Index grew by 25%, Germany’s DAX grew by 18% while Nifty 50 has grown by 5%.
Q) What major global themes are attracting Indian investors today—AI, tech, clean energy, healthcare, commodities?
A) Client investments are allocated in a distributed manner, covering a comprehensive array of market segments. This distribution spans core sectors including, but not limited to, Healthcare, Consumption, Industrial, Financial Services, Utilities, Consumer Cyclicals, and Technology.
Q) What key changes under the Liberalised Remittance Scheme (LRS) or other regulations should investors be aware of for 2026?
A) Some of the changes that have been enforced from 1st Apr’25 and hence applicable across FY2026, include a higher Tax Collected at Source (TCS) threshold of ₹10 lakh, and a 20% TCS rate on overseas investments and other non-education/medical purposes above that threshold.
Besides these, there has been an enhancement in the scrutiny that Authorized Dealer banks are now conducting on the nature and intent of remittances through their paperwork and purpose code.
Funds remitted to overseas bank accounts need to be invested or utilized as per the purpose declared in the remittance application, and within the timeline of 6 months from date of remittance.
Idle funds in overseas bank accounts need to be brought back to domestic bank accounts from where the remittance was initially made.
Q) How should investors navigate compliance, taxation, and reporting when putting money in overseas assets?
A) Investors need to have clarity while sending funds overseas for investing. They need to track the movement of funds between different investments across such tenures, to stay compliant.
These must get reported with the Income Tax dept. in India every Financial Year and pay necessary tax on such instruments or funds. Ideally, working with a qualified team who understands the nature of investments and its tax implications is recommended.
Q) How much of an average Indian investor’s portfolio should ideally be allocated to global assets in 2026?
A) This can be a subjective range, but we suggest a 10% – 25% allocation to global assets is appropriate depending on the portfolio objective, construction and risk profile of investors.
Academic and industry studies consistently show that the correlation between Indian equities and major global indices is low, typically ranging from 0.30 to 0.45. International exposure within portfolios provides diversification benefits due to the low correlation.
Allocating internationally is essential for capturing returns from themes and companies that are driving global productivity growth but are geographically concentrated outside India.
Q) Do global ETFs, mutual funds, or direct stock investing offer the most efficient exposure?
A) In our view, global ETFs are most effective in accomplishing the required diversification, and it is fairly cost efficient as well.
However, due to the fact that International markets provide a variety of strategies, instruments, structures and options, they should be evaluated and looked at purely based on suitability and purpose.
Q) Which international markets look most attractive for Indian investors in 2026—US, Japan, Europe, China, or emerging markets?
A) From a diversification standpoint, a mix of all these regions makes a reasonable allocation. We have a proprietary basis to weigh the regions differently in portfolios based on a variety of factors.