India's diaspora knows its growth story best. They must utlise GIFT City route to stay invested
This is an experience every NRI knows by heart. You return to India after years away and find a country that feels both familiar and transformed. The airport is more efficient, the infrastructure seamless, and aspirations more visible.
Then you fly back. The memories settle somewhere between pride and surprise as life abroad resumes. And when it comes to managing your wealth, you carry on as though those observations had no bearing on how you invest.
Unlike economies whose fortunes hinge on a single theme, India is diverse. It has new-age tech companies and decades-old industrials. A financial sector serving millions of first-time borrowers and investors. A consumption story powered by a rising middle class and an infra buildout that is underway. Exports and global themes matter, but India's primary engine has always been domestic demand. That is what sets India apart from other EMs.
Some of India’s key reforms-- GST, IBC, labour reforms, DPI--have emerged when the cost of inaction became too high. CMs are now actively courting businesses, domestic and global. Cooperative and competitive federalism are visible on the ground.
For an NRI assessing India from overseas, the sharp rupee depreciation over the past couple of years may prompt caution. In dollar terms, returns on Indian investments have looked softer than the underlying rupee performance would suggest. It deserves a closer look though.
On a real effective exchange rate (REER) basis, the rupee appears undervalued. Recent weakness reflects FPI outflows driven by valuation gaps, AI-led investment trends, tariff uncertainty, geopolitical tensions in West Asia, and elevated US bond yields—cyclical pressures rather than structural flaws.
Historically, the rupee has depreciated against the dollar broadly in line with the India-US inflation differential. That is the long-run anchor. Periodic overshooting is inevitable; today's environment appears to be one such episode.
Importantly, with RBI's inflation-targeting framework well established, the India-US inflation differential has narrowed. Barring temporary dislocations, this should translate into a slower pace of rupee depreciation than investors have historically experienced. For NRIs with a long investment horizon, an undervalued currency is not necessarily a risk—it can also be a source of return.
The investment case, therefore, carries a twin tailwind for overseas investors. The structural upside of Indian equities, amplified by currency gains that a mean reversion toward fair value could deliver going forward.
India's diaspora has historically stepped in during periods of stress.
● In 1998, Pokhran nuclear tests drew sanctions, and Resurgent India Bonds raised over $4 bn from NRIs.
● In 2000, India Millennium Deposits channelled over $5 bn.
● Post-2013 taper tantrum, RBI's FCNR-B swap scheme brought about $30 bn.
RBI has recently announced measures that could make FCNR deposits more attractive.
But this time, the context is different. Indian capital markets have evolved significantly, with greater breadth, deeper liquidity, stronger governance standards, and wider sectoral representation than in the past. More importantly, they are no longer primarily dependent on foreign flows.
Amid heightened volatility, monthly SIP inflows have remained resilient at about $3 bn in 2026. In December 2025, domestic institutional investors (DIIs) surpassed FPIs in ownership of Nifty50 companies.
Indian markets are becoming, gradually and credibly, self-reliant. That said, investment required to sustain 7% plus growth cannot be met by domestic flows alone. Policymakers have been engaging with FPIs to understand and address their concerns, and sooner or later, FPIs could resume meaningful flows into Indian equities.
NRIs occupy a unique position. They live and work in developed markets. They are exposed to varied wealth-creation strategies, sophisticated financial products and bring a valuable cross-border perspective.
They also have an advantage institutional FPIs lack: they come home. Through conversations with family, former colleagues, and business owners, they witness changes that no research report fully captures. They understand India's transformation in ways that extend beyond a market data terminal or brokerage note.
This makes NRIs among the most naturally positioned investors in India. GIFT City offers the over 30-mn-strong Indian diaspora a streamlined way to participate in India's growth story. Its domiciled funds allow non-resident investors to transact in foreign currency without the need for an additional bank account, demat account, or PAN.
Through GIFT City feeder funds, NRIs can access established Indian MFs through a tax-efficient, and operationally simpler route. Easier repatriation, a simplified tax regime, and lower administrative friction compared with traditional channels make GIFT City a compelling avenue for diaspora participation in India's long-term growth.
Every NRI who visits India eventually returns to the life they have built elsewhere, but there is no reason their capital must follow. India's growth story does not pause between visits; compounding continues in the balance sheets of businesses, the rising consumption of an expanding middle class, and the infrastructure being built to support economic activity for decades.
NRIs who invest in India participate in that story from wherever they are, with their capital staying, working, and growing within an economy they understand better than most foreign investors. When they return and sense once again that familiar feeling of a country that has moved forward, they will have done more than merely witness its progress—they will have been a part of it.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com)
Then you fly back. The memories settle somewhere between pride and surprise as life abroad resumes. And when it comes to managing your wealth, you carry on as though those observations had no bearing on how you invest.
Unlike economies whose fortunes hinge on a single theme, India is diverse. It has new-age tech companies and decades-old industrials. A financial sector serving millions of first-time borrowers and investors. A consumption story powered by a rising middle class and an infra buildout that is underway. Exports and global themes matter, but India's primary engine has always been domestic demand. That is what sets India apart from other EMs.
Some of India’s key reforms-- GST, IBC, labour reforms, DPI--have emerged when the cost of inaction became too high. CMs are now actively courting businesses, domestic and global. Cooperative and competitive federalism are visible on the ground.
For an NRI assessing India from overseas, the sharp rupee depreciation over the past couple of years may prompt caution. In dollar terms, returns on Indian investments have looked softer than the underlying rupee performance would suggest. It deserves a closer look though.
On a real effective exchange rate (REER) basis, the rupee appears undervalued. Recent weakness reflects FPI outflows driven by valuation gaps, AI-led investment trends, tariff uncertainty, geopolitical tensions in West Asia, and elevated US bond yields—cyclical pressures rather than structural flaws.
Historically, the rupee has depreciated against the dollar broadly in line with the India-US inflation differential. That is the long-run anchor. Periodic overshooting is inevitable; today's environment appears to be one such episode.
Importantly, with RBI's inflation-targeting framework well established, the India-US inflation differential has narrowed. Barring temporary dislocations, this should translate into a slower pace of rupee depreciation than investors have historically experienced. For NRIs with a long investment horizon, an undervalued currency is not necessarily a risk—it can also be a source of return.
The investment case, therefore, carries a twin tailwind for overseas investors. The structural upside of Indian equities, amplified by currency gains that a mean reversion toward fair value could deliver going forward.
India's diaspora has historically stepped in during periods of stress.
● In 1998, Pokhran nuclear tests drew sanctions, and Resurgent India Bonds raised over $4 bn from NRIs.
● Post-2013 taper tantrum, RBI's FCNR-B swap scheme brought about $30 bn.
RBI has recently announced measures that could make FCNR deposits more attractive.
But this time, the context is different. Indian capital markets have evolved significantly, with greater breadth, deeper liquidity, stronger governance standards, and wider sectoral representation than in the past. More importantly, they are no longer primarily dependent on foreign flows.
Amid heightened volatility, monthly SIP inflows have remained resilient at about $3 bn in 2026. In December 2025, domestic institutional investors (DIIs) surpassed FPIs in ownership of Nifty50 companies.
Indian markets are becoming, gradually and credibly, self-reliant. That said, investment required to sustain 7% plus growth cannot be met by domestic flows alone. Policymakers have been engaging with FPIs to understand and address their concerns, and sooner or later, FPIs could resume meaningful flows into Indian equities.
NRIs occupy a unique position. They live and work in developed markets. They are exposed to varied wealth-creation strategies, sophisticated financial products and bring a valuable cross-border perspective.
They also have an advantage institutional FPIs lack: they come home. Through conversations with family, former colleagues, and business owners, they witness changes that no research report fully captures. They understand India's transformation in ways that extend beyond a market data terminal or brokerage note.
This makes NRIs among the most naturally positioned investors in India. GIFT City offers the over 30-mn-strong Indian diaspora a streamlined way to participate in India's growth story. Its domiciled funds allow non-resident investors to transact in foreign currency without the need for an additional bank account, demat account, or PAN.
Through GIFT City feeder funds, NRIs can access established Indian MFs through a tax-efficient, and operationally simpler route. Easier repatriation, a simplified tax regime, and lower administrative friction compared with traditional channels make GIFT City a compelling avenue for diaspora participation in India's long-term growth.
Every NRI who visits India eventually returns to the life they have built elsewhere, but there is no reason their capital must follow. India's growth story does not pause between visits; compounding continues in the balance sheets of businesses, the rising consumption of an expanding middle class, and the infrastructure being built to support economic activity for decades.
NRIs who invest in India participate in that story from wherever they are, with their capital staying, working, and growing within an economy they understand better than most foreign investors. When they return and sense once again that familiar feeling of a country that has moved forward, they will have done more than merely witness its progress—they will have been a part of it.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com)
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