Weak domestic returns fuel India's overseas retail investing boom
INDA•Overseas investments by Indian individuals more than doubled year over year to nearly $2.3 billion in the first half of 2026, as investors sought returns and AI-related assets abroad. Asset managers are launching funds through GIFT City, where the RBI's overseas investment limits do not apply.
1. Overseas flows rise
International investments by individuals in India, directly or through funds, more than doubled from a year earlier to nearly $2.3 billion in the first half of 2026, central bank data showed. That puts flows on track to exceed the full-year record of $2.65 billion in 2025. The Nifty 50 fell 5.3% over two years, while the MSCI Emerging Markets Index gained 47% and the S&P 500 rose 32%.
2. Funds target demand
At least half a dozen funds have launched in the past six months through GIFT City, including JioBlackRock Advantage World Equity Fund. HDFC Asset Management, Parag Parikh and Aditya Birla Sun Life have also launched funds there. The RBI's $7 billion cumulative overseas investment limit for Indian funds and $1 billion limit for each asset manager are almost exhausted, restricting the creation of fresh units in other funds.
3. Investors seek access
Assets in overseas fund-of-funds schemes rose 42% year over year to 488 billion rupees in September, while registered investors increased 34% to nearly 2 million. Some overseas ETFs traded at large premiums to their underlying portfolio values. Discount brokers Groww, Zerodha and Angel One launched fractional investing platforms this month, while Indian authorities are cautious about overseas flows but are not considering measures to curb them, three people at Indian regulators told Reuters.
