N※N

India's LRS Outflows Surpass INR2 Billion Amid 55% Surge in 2025

  //stocks-investing.news-articles.net/content/202 .. -surpass-inr2-billion-amid-55-surge-in-2025.html
  Published in Stocks and Investing on Thursday, November 27th 2025 at 8:38 GMT by The New Indian Express

• 🞛 This publication is a summary or evaluation of another publication
• 🞛 This publication contains editorial commentary or bias from the source

2025-11-27 246 x 205 / 3777 Bytes

2025-11-27 226 x 223 / 11151 Bytes

2025-11-27 224 x 224 / 8980 Bytes

2025-11-27 228 x 221 / 5608 Bytes

India’s Offshore Investment Landscape Grows Briskly: LRS Flows Cross ₹2 Billion This Year

By the New Indian Express (27 Nov 2025)

The Liberalised Remittance Scheme (LRS), a long‑standing conduit for Indian residents to invest abroad, has once again shown the power of foreign markets to attract Indian capital. In the first nine months of 2025, aggregate LRS outflows to offshore stocks and real‑estate ventures surged 55 percent, topping the ₹2 billion mark for the year. The sharp uptick underscores both the growing appetite of Indian investors for diversification and the expanding ease of cross‑border capital movement.

The Numbers Behind the Surge

The 55 percent rise is the steepest in nearly a decade, and the total LRS outflow of ₹2.01 billion (≈ US$ 26 million) is the highest since the scheme was introduced in 1999. Of this, equity investments comprise the lion’s share (≈ 65 %), while real‑estate accounts for roughly 20 %. The remaining 15 % is spread across mutual funds, ETFs, and other financial instruments.

Why the LRS Channel Is Gaining Momentum

1. A Re‑energised Market Environment
After a prolonged period of muted global equity returns during the 2020‑2023 pandemic lull, 2024 saw a resurgence in corporate earnings, tech valuations, and commodity prices. Investors are now capitalising on a recovering global macro‑economic backdrop, with the United States, United Kingdom, and Singapore topping the list of preferred destinations.

2. Regulatory Liberalisation
The Reserve Bank of India (RBI) announced a 2025‑mid‑year “soft‑landing” strategy for the LRS, which included a higher cap for remittances (₹10 lakh per person per financial year, up from ₹7 lakh) and streamlined documentation for real‑estate investments overseas. The RBI’s guidelines also reduced the minimum holding period for LRS‑funded real‑estate purchases to 12 months, encouraging more speculative ventures.

3. Tax Incentives and Double Tax Avoidance Agreements (DTAA)
India’s comprehensive DTAA network, especially with the United States and Singapore, has reduced the effective tax burden for capital gains on overseas securities. Moreover, the Indian tax regime’s provision to deduct 50 percent of foreign income tax paid (subject to cap) has further sweetened the prospect of overseas equity.

4. Improved Financial Intermediaries
Major Indian banks (State Bank of India, HDFC Bank, ICICI Bank) and fintech platforms (Paytm Payments Bank, Razorpay) have rolled out dedicated LRS portals with real‑time tracking, lower fees, and multilingual support. These platforms also provide curated lists of vetted overseas brokers and real‑estate developers, making entry into foreign markets easier than ever.

Spotlight on Top Destinations

• United States: 48 percent of total equity outflows, primarily driven by large‑cap tech and growth stocks listed on the NASDAQ and NYSE.
• United Kingdom: 17 percent, dominated by real‑estate investments in London and emerging sectors like fintech and green energy.
• Singapore: 13 percent, largely concentrated on real‑estate and ETFs tracking the Hang Seng index.
• Other Emerging Markets: India also saw a modest yet notable jump in investments to Brazil, Japan, and Hong Kong, reflecting a broader diversification strategy.

The Real‑Estate Angle

Unlike equity, real‑estate LRS inflows have historically been constrained by higher entry costs and regulatory scrutiny. The 2025 “soft‑landing” policy has mitigated this barrier. The most popular overseas real‑estate markets include:

• United States: Luxury residential properties in California and New York; commercial office spaces in New York and Boston.
• Singapore: Residential condominiums and mixed‑use developments.
• United Kingdom: High‑end residential units in London and new mixed‑use developments in Manchester.

While real‑estate offers higher yield potential, investors must remain wary of currency volatility, property market cycles, and local regulatory changes. The RBI has also advised investors to maintain a diversified asset mix within the LRS portfolio to offset sector‑specific risks.

Market Perspectives

“The LRS is no longer a fringe avenue; it is becoming a mainstream tool for wealth management,” notes Anil K. Mehta, Chief Investment Officer at SBI Wealth Management. “The key to long‑term success will be disciplined allocation and a keen understanding of foreign market fundamentals.”

Rural bank representative Priyanka Sinha also emphasised the role of financial literacy: “We are training our staff to explain the nuances of LRS, especially the tax and currency aspects, to help customers make informed choices.”

Regulatory and Policy Updates

• RBI’s 2025 LRS Guidelines: Effective 1 Jan 2025, the RBI raised the cap to ₹10 lakh per person, extended the reporting threshold, and simplified the process for real‑estate investments.
• Taxation Update: The Indian Income Tax Department released an interpretation circular clarifying that capital gains on foreign equity held for more than 12 months are eligible for a 20 percent tax rate, without the 15 percent surcharge, provided the gains are reported under the ‘Foreign Assets’ section.
• Cross‑border Remittance Monitoring: To curb illicit money flows, the RBI is now mandating that all LRS transactions above ₹1 lakh undergo additional scrutiny, including source‑of‑fund verification.

Future Outlook

The 55 percent jump in LRS outflows suggests a sustained trend towards international diversification. Analysts predict that if global equity markets continue to rally, and if India’s domestic markets face stagnation, LRS inflows may surpass ₹3 billion by the end of 2026. The RBI’s “soft‑landing” strategy and ongoing tax reforms will likely continue to bolster confidence in overseas investments.

However, potential headwinds include:

• Currency Fluctuations: A stronger rupee could erode returns on overseas holdings.
• Geopolitical Risks: Trade tensions between the US and China, or instability in emerging markets, could affect portfolio performance.
• Domestic Policy Changes: Any tightening of LRS limits or increased tax on foreign investments would immediately dampen inflows.

In Summary

India’s LRS channel has once again proven its relevance in a globalised investment environment. With equity and real‑estate outflows collectively surpassing ₹2 billion this year, the scheme has attracted a wider spectrum of investors—from seasoned professionals to young millennials seeking diversification. The RBI’s progressive regulatory framework, coupled with improved access through banks and fintech, has turned the LRS into a powerful tool for wealth creation. As the world moves towards an increasingly interconnected financial ecosystem, Indian investors are poised to benefit from opportunities beyond domestic borders, provided they navigate the associated risks with due diligence and informed strategy.