Indian Investors Go Global: Tech & Diversification Drive Overseas Investments

Indian investors are increasingly directing capital towards overseas markets, a trend propelled by global advancements in technology and AI, alongside the comparatively subdued performance of domestic stock markets and a depreciating rupee.

Surge in Overseas Capital Deployment

This strategic shift is fundamentally motivated by a desire for portfolio diversification and a reduction in single-country investment risk, as confirmed by official data.

The Reserve Bank of India (RBI) reported a substantial 56% year-on-year increase in overseas equity and debt investments under the Liberalised Remittance Scheme (LRS), reaching $2.65 billion in FY26. Over the last five years, international investments via LRS have grown by 5.6 times, with individuals permitted to remit up to $250,000 annually.

Assets under management (AUM) in domestic fund of funds that invest internationally also saw significant expansion. These AUM grew by 83% in the year leading up to May 2026 and by 111.5% over the preceding three years, reflecting a broader trend of global asset allocation.

Expert Insights on Diversification Benefits

Industry experts underscore the advantages of exposure to global markets. Vaibhav Shah, Head of Products, Business Strategy and International Business at Mirae Asset, noted that India’s market capitalization represents only 4% of the global total.

International markets, Shah explained, offer access to diverse companies, sectors, and themes not readily available within India. Rahul Bhutoria, Director and co-founder of Valtrust, advises most retail investors to allocate between 5% and 10% of their portfolios to international investments.

This allocation, Bhutoria stated, aids in currency diversification and provides access to unique global themes. While the United States remains a primary destination due to its market depth and liquidity, new opportunities are emerging across Europe, other emerging markets, and China, where valuations in certain sectors appear more attractive.

Critical Considerations for Overseas Investment

Despite the opportunities, caution is advised against impulsive investments, particularly in volatile sectors like US technology stocks. Several critical considerations include various tax implications.

These tax considerations encompass a 12.5% long-term capital gains tax on international equity funds held for over 24 months, a 20% Tax Collected at Source (TCS) on LRS remittances exceeding ₹10 lakh, and a 30% US withholding tax on dividends. Investors must also be aware of potential US estate tax liabilities.

Furthermore, a significant compliance burden requires the declaration of all overseas holdings to prevent penalties under the Black Money Act. Clear annual statements from brokers are essential for simplified tax filing, ensuring adherence to regulatory requirements.

Pathways for Indian Investors Abroad

Indian investors can engage in overseas investing through several primary methods. One common approach involves investing via Indian mutual funds that channel funds into international mutual funds or ETFs, although many of these are currently closed to new investments due to regulatory limits.

Another pathway is direct investment in foreign stocks, bonds, ETFs, and mutual funds using Indian online platforms. Each method presents distinct advantages and regulatory nuances that investors must assess carefully.