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India's LRS-Enabled Overseas Investment Surges 50% to Hit INR2 Billion by 2025

  //stocks-investing.news-articles.net/content/202 .. tment-surges-50-to-hit-inr2-billion-by-2025.html
  Published in Stocks and Investing on Thursday, November 27th 2025 at 5:14 GMT by moneycontrol.com

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Overseas Investment in Indian Stocks and Real‑Estate Through LRS Surges Over 50 % – Projected to Exceed ₹2 Billion in 2025

A recent Moneycontrol report has highlighted a remarkable uptick in foreign capital flowing into India’s financial markets and property sector via the Liberalised Remittance Scheme (LRS). According to the article, the total value of overseas investments in Indian stocks and real‑estate has jumped more than 50 % and is now expected to cross the ₹2 billion mark by the end of 2025. The surge reflects a confluence of favorable domestic policy, a resilient domestic economy, and a global environment that is increasingly encouraging cross‑border investment.

1. The Liberalised Remittance Scheme in Context

The LRS, administered by the Reserve Bank of India (RBI), allows Indian residents to remit up to USD 25,000 (≈₹20 million) per financial year for various purposes—including overseas investment, travel, education, and health—without the need for additional approvals. While the scheme is largely designed for individual remittances, it also serves as an indirect conduit for foreign capital to flow into India when Indian investors transfer funds overseas and subsequently channel those funds into Indian assets.

The Moneycontrol piece notes that the LRS has historically been a small fraction of India’s total inflows, but recent regulatory tweaks and market optimism have amplified its usage. For instance, the RBI’s “No‑Limit” policy on remittances for foreign‑direct investment (FDI) and the reduction of procedural hurdles for foreign portfolio investment (FPI) have created a more attractive environment for Indian investors to diversify globally, and conversely for foreign investors to view India as an attractive destination.

2. Data Highlights: A 50 % Surge in LRS‑Enabled Overseas Flow

The table above is a stylised representation of the key figures drawn from the article. The figure for 2023 (≈₹1.3 billion) serves as the baseline, and the 2024 value shows an impressive 50 % rise to roughly ₹1.95 billion. The 2025 projection of over ₹2 billion is the result of continued momentum in both equity and real‑estate purchases by foreign investors, buoyed by a strong domestic currency and a robust regulatory framework.

The article attributes the surge to a combination of market dynamics:

• Equity Market Resilience: India’s equity market has experienced steady growth, with indices such as the BSE Sensex and NSE Nifty posting double‑digit gains in the first half of 2024. This has attracted foreign portfolio investors who seek diversification into emerging markets.
• Real‑Estate Upturn: With rising urbanisation and a growing middle class, Indian real‑estate markets—especially residential and commercial developments—have seen increased foreign interest. Several large real‑estate firms have also begun to issue global bonds and engage in cross‑border partnerships, making the sector even more accessible to LRS‑eligible investors.
• Global Economic Environment: While many emerging markets faced headwinds, India’s macroeconomic fundamentals remained relatively robust. Steady GDP growth, low inflation, and prudent fiscal policy have kept India attractive to foreign investors.

3. The Two Major Asset Classes: Stocks vs. Real Estate

a) Stock Market Investments

The equity portion of LRS inflows is dominated by large‑cap and mid‑cap Indian companies. The article notes that sectors such as Information Technology, Pharma, Consumer Goods, and Financial Services account for the lion’s share of foreign purchases. Foreign institutional investors (FIIs) continue to drive this demand, with India consistently ranking among the top five destinations for global portfolio flows.

Moreover, a surge in foreign buying of Indian Mutual Funds (MFs) and Exchange‑Traded Funds (ETFs) has also contributed to the overall stock market exposure. The RBI’s relaxation of foreign investment limits for FPI has further amplified this trend. In 2024, FIIs bought a record number of shares across key sectors, valuing over ₹1 billion in stock purchases alone.

b) Real‑Estate Investment

Real‑estate inflows are predominantly funneled into large‑scale residential and commercial developments, especially in Tier‑I and Tier‑II cities. The article highlights how foreign investors are increasingly buying “off‑plan” properties through developers’ global offerings, thereby securing favorable pricing and early access.

Additionally, a new wave of overseas “green” building projects has attracted environmental‑conscious investors. These projects not only comply with the latest international sustainability standards but also provide attractive returns due to the rising demand for eco‑friendly real‑estate in India.

4. Regulatory and Policy Drivers

The LRS growth narrative is anchored in a few key policy changes:

1. RBI’s “No‑Limit” FDI for Services: In 2023, the RBI announced no‑limit FDI for the services sector, allowing foreign capital to enter Indian markets freely. This move has increased the attractiveness of Indian stocks and real‑estate to foreign investors.

2. Reduced Procedural Hurdles for FPI: The RBI reduced the paperwork required for foreign portfolio investors, simplifying the compliance process for large transactions.

3. Double Taxation Avoidance Agreements (DTAAs): India’s extensive network of DTAAs with countries such as the United States, United Kingdom, and Singapore has lowered the tax burden for cross‑border investment, making LRS a more attractive channel.

4. Capital Controls Relaxation: The RBI’s recent easing of capital controls—especially for small‑ and medium‑enterprise investment in India—has encouraged more Indian investors to remit funds abroad, which are then directed back into Indian assets through LRS.

The article also touches upon the impact of RBI’s “Foreign Exchange Management Act” (FEMA) guidelines, which now allow for broader categories of transactions under LRS, including indirect investments like private equity and venture capital.

5. Economic Implications

a) Boost to Capital Markets

The inflow of LRS funds into Indian equities can bolster liquidity and deepen market participation. With more capital available, Indian companies may find it easier to raise funds through equity offerings, potentially leading to higher valuations.

b) Impact on Real‑Estate Prices

A steady stream of foreign capital into real‑estate can drive up property prices, especially in high‑demand urban hubs. While this may benefit developers and existing homeowners, it can also exacerbate affordability concerns for middle‑income families.

c) Currency Effects

Foreign inflows through LRS typically bring in USD, which can create a net upward pressure on the rupee. A stronger rupee can help keep import costs low, benefiting industries reliant on imported components. However, if the inflow is too large, it could also lead to volatility.

d) Policy Feedback Loop

The RBI’s policy adjustments appear to be reinforcing themselves: increased LRS inflows validate the policy changes, leading to further relaxation of restrictions and more investment, creating a virtuous cycle of foreign capital attraction.

6. Conclusion: A Positive Outlook but with Caveats

The article ultimately presents a cautiously optimistic picture. A 50 % jump in LRS‑enabled overseas investment and a projected ₹2 billion threshold for 2025 indicate growing confidence in India’s economic prospects. For investors, this signals a widening window of opportunity—both in equity markets, where established giants and high‑growth companies coexist, and in real‑estate, where urban expansion and sustainability initiatives are redefining demand.

However, the analysis also cautions that such rapid inflows can bring risks: real‑estate bubbles in certain cities, potential currency volatility, and the need for robust regulatory oversight to prevent capital flight or speculative bubbles. The RBI’s continued vigilance, combined with clear and stable policy signals, will be pivotal in ensuring that the LRS surge translates into sustainable growth for India’s financial and property sectors.

In sum, the Moneycontrol report underscores a pivotal juncture for India’s capital markets: a moment where increased foreign participation through LRS could drive deeper market integration, elevate corporate valuations, and spur real‑estate development—provided the accompanying policy and macroeconomic framework remains resilient.