For years, Indians have been unapologetically global in their spending. Foreign holidays are no longer rare indulgences. International education has become a mainstream aspiration. Overseas healthcare, luxury brands and even destination weddings are now familiar entries in the Indian household budget. But when it came to investing, Indians largely stayed at home. That, quietly, is changing. Indian investors are turning global — not because India’s growth story has weakened, but because portfolios mature when they stop relying on a single geography. Regulators, too, are adapting to this shift, refining rules so that overseas exposure occurs in a measured, transparent and investor-friendly manner.
Why look beyond?
India remains one of the fastest-growing large economies. But long-term investment success has never been betting on a single country, a single asset class or a single theme. Markets move in cycles. There are long phases when US technology stocks dominated global returns. At other times, European companies benefit from currency movements and valuations, Japan has surprised investors after decades of stagnation, while commodity-linked economies like Brazil have outperformed during inflationary cycles. A portfolio invested in a one country — even the promising one — carries concentration risk.
New global investors
Global investing is no more restricted to the ultra rich families. Rather three broad investor profiles are emerging.
For most the preferred route is not direct overseas stock picking but mutual funds with global exposure.
MFs, the natural gateway
Direct overseas stock investing involves foreign brokerage accounts, currency remittances, tax reporting and operational complexity. This route suits some investors — but not the most. Mutual funds offer three advantages: professional management, regulatory oversight and operational simplicity. The Securities Exchange Board of India (Sebi) has progressively clarified how Indian mutual funds can invest in overseas funds and ETFs, even when these overseas funds or ETFs have some exposure to Indian securities, subject to strict conditions.
Most global mutual fund exposure in India comes through feeder fund structures. In simple terms, an Indian mutual fund scheme collects money from Indian investors and invests in a single overseas fund — the ‘master fund’. The master fund then invests across global markets according to its mandate. The Indian investor doesn’t directly buy foreign stocks, but participates in global returns through a domestic, regulated wrapper.
Active, passive and thematic
Global investing introduces Indian investors to different fund-management philosophies. Some funds follow passive strategies, tracking global or regional indices at low cost. Others are actively managed, where fund managers select stocks based on research, valuation and long-term business prospects. The thematic funds focus on global trends rather than countries. These themes play out across continents and supply chains, making a global platform essential. The thematic funds can be powerful but volatile and are best used as satellite allocations.
Why caps exist
Many investors have faced a familiar frustration — finding a global mutual fund they like, only to be told that new investments are temporarily restricted. This is not a fund manager’s decision, instead it’s a regulator constraint.
At the heart of the issue lies three specific caps. First, there is an industry-wide ceiling of $7 billion on how much Indian mutual funds can collectively invest in overseas securities. Second, there is a separate cap of $1 billion in International ETFs. Third, each asset management company has its own individual limit of $1 billion on total overseas investment. Once any of these limits are breached, fund houses have to stop fresh inflows.
The primary objective behind these caps is macroeconomic stability. When Indian mutual funds invest abroad, a large pool of money is converted into foreign currency. A sudden surge in conversion can weaken the rupee, making imports from fuel to smartphones more expensive. Caps help prevent abrupt pressure on currency.
When international mutual fund investments are paused, investors are not entirely shut out of global exposure. One effective alternative is Multinational Company (MNC) funds. These funds invest in Indian-listed subsidiaries of global corporations — allowing investors to benefit from international business models without moving capital overseas.
For Indian residents, most overseas mutual funds are taxed as non-equity investments. Capital gains taxation depends on the holding period. Dividends are taxable, and currency movements affect returns.
Gift City also offers a parallel outbound route — funds launched from IFSC invest directly in global equities or ETFs in foreign currency, with taxes accounted for at the fund level and transparency in NAVs.
Psychological shift
This is not just a story about regulation. It is a mindset shift. Indian investors are moving from “India is enough” to “India is core, but the world completes the portfolio”. This is how mature capital behaves. Just as Indian companies globalised operations decades back, Indian households are now globalising portfolios — carefully, sensibly and under regulatory guardrails. The journey from global tourists to global investors has begun.
Malhar Majumder is director, research & development, Investaffairs Futuristic Pvt Ltd