Overseas equity/debt investments under RBI's Liberalised Remittance Scheme (LRS) surged 56% to $2.65 billion in FY26, up 5.6 times over five years. Indian investors seek global diversification as domestic markets delivered negative returns while US, China, Japan posted 20-200% gains. LRS allows $250,000 annual remittance per resident individual. GIFT City route offers tax-efficient alternative through Indian brokers.

The dramatic 5.6x growth in LRS-route overseas investments reflects India's evolving capital account liberalization and investor behavior shift. With Nifty50 and Sensex posting negative 5% and 7% returns respectively while global markets surged, Indians are diversifying beyond domestic exposure. The LRS framework, allowing $250,000 annual remittances per individual, demonstrates RBI's calibrated approach to capital account convertibility - providing investment freedom while maintaining macroeconomic stability. Three investment routes exist: direct international brokerages (counted under LRS), Indian mutual funds with overseas exposure (outside LRS but capped at $7 billion industry-wide), and GIFT City route offering tax efficiency. The rupee's persistent depreciation strengthens the currency hedging case for foreign asset ownership. This trend signals India's financial market maturation - from closed economy protectionism to strategic global integration. However, regulatory caps on mutual fund overseas investments show policymaker caution about capital flight risks during volatile periods.