Satinder Aggarwal highlights what Indian investors diversifying into equities, ETFs, and real estate abroad to manage risk, returns, and currency exposure must watch out for.
Indian investors have gradually expanded their horizons outside of their home markets in recent years.
In April 2025, investments in foreign debt and equity instruments surged past $200 million (roughly Rs 1,746 crore), more than doubling the amount recorded in the same month in the year prior.
This was a startling statistic. Whether in Tier 1 cities or smaller towns, the typical Indian portfolio has historically been based on domestic stocks, bank deposits, gold, and real estate. These asset classes still have a significant impact, but the recent change reflects a growing understanding that diversifying risk, expanding opportunities, and strengthening a portfolio can all be achieved by including international exposure.
Why Indian Investors Are Diversifying Abroad
Several structural reasons are driving this shift
- Access to growth sectors: India's listed markets have very little representation in some of the most dynamic industries in the world, notably advanced technology, semiconductors, biotechnology, and global healthcare. Through international mutual funds, exchange-traded funds (ETFs), or stocks, direct investments overseas provide exposure to these business sectors.
- Currency diversification: Holding assets in foreign currencies such as the US dollar or euro helps cushion portfolios against rupee depreciation, preserving purchasing power and long-term wealth.
- Better risk management: Economies across the world move through different phases of the cycle at different times. By allocating capital across geographies, Indian investors are less exposed to the volatility of any single market.
Around the world, economies go through various stages of the cycle at various points in time. Indian investors are less exposed to the volatility of any given market by propagating their money across various geographical areas.
How Indians Can Invest Abroad
Acknowledging the necessity of global exposure is just the initial step. For the majority of investors, the more pragmatic query is: How does one go about making foreign investments?
The Reserve Bank of India's Liberalised Remittance Scheme (LRS), which permits residents to remit up to $250,000 for approved purposes each fiscal year (April-March), holds the key to the solution.
Within this limit, investors can:
- Buy foreign equities, ETFs, and offshore mutual funds
- Open deposits abroad
- Purchase property in certain international markets
- Pay for overseas education or medical expenses
- Send gifts or financial support to close relatives abroad
Vitally, dividends, interest, or rental income from these foreign assets can be preserved and reinvested overseas. The sole requirement is that any foreign currency that has not been utilised must be returned within 180 days.
However, RBI guidelines continue to strictly prohibit activities like margin trading, leveraged forex bets, and transactions involving high-risk jurisdictions.
The Role of GIFT City
In addition to LRS, another significant channel has surfaced: Gujarat's International Financial Services Centre (GIFT City) (IFSC).
GIFT City, which is governed by the International Financial Services Centres Authority (IFSCA), a single regulator, permits foreign exchange transactions and provides tax savings and streamlined compliance
For Indian investors, its appeal lies in:
- Wider access: GIFT City is increasingly launching global funds, portfolio management services, and alternative investment products.
- Efficiency: Investments are still made in foreign currencies, but India's legal system handles custody, reporting, and supervision.
- Cost advantages: Compared to conventional offshore routes, transaction fees and tax treatment are frequently more effective.
Where Is the Capital Flowing?
Despite the fact that retail participation in international markets is still growing, some clear trends can be seen:
- Equities & ETFs: Investors continue to favour US indices like the S&P 500 and Nasdaq since they provide accessibility to top consumer, healthcare, and technology companies that are not readily available in India. Additionally, European benchmarks are becoming more popular for diversification.
- Funds & AIFs: Thematic investments in areas like artificial intelligence, renewable energy, and blockchain are drawing growing interest.
- Real Estate: A portion of investors are still considering real estate in international hotspots like Singapore, Dubai, and London, combining currency diversification with potential return on investment and lifestyle advantages.
The Way Forward
Global investing is no longer an exclusive niche for India's ultra-wealthy. It is turning into a rational tactic for people looking for stability and long-term development. However, there are tax, cost, and compliance considerations for each route, which illustrates the significance of careful planning.
When approached carefully, international investments give Indian investors more ways to compound returns, more currencies to earn in, and greater resilience against domestic market swings. In short, global diversification is not just a trend; it is steadily becoming an integral part of the modern Indian portfolio.
Global investment platforms play a crucial role in simplifying international diversification. By offering seamless and secure interfaces with single-view access to global markets, these platforms make cross-border investing far more practical.
Satinder Aggarwal is CEO and Founder of EQBAC.
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