According to The Economic Times, Pradeep Gupta, Chairman & Managing Director of Anand Rathi Share and Stock Brokers Limited, recommends that NRIs allocate 25-35% of their global portfolio to Indian assets for long-term wealth creation. India represents 8% of world GDP in PPP terms and around 4% of global market capitalisation, but is expected to contribute 15-20% of incremental global growth over the next decade. Shiv Gupta from Sanctum Wealth adds that for NRIs permanently settled overseas with predominantly foreign-currency liabilities, 10-20% allocation to Indian assets may be appropriate, rising to 25-40% for those planning return to India or with significant future rupee liabilities. Despite recent underperformance with the Nifty returning about 10% in local currency in 2025 but MSCI India delivering only 2-4% in dollar terms, Gupta views this as mean reversion after a period of valuation excess rather than a structural break.
As reported by The Economic Times, India was among the best-performing major markets globally between 2021 and 2024, and over 20 years it has still outperformed most global peers even in dollar terms. However, FPIs pulled out a record ~$18 billion (₹1.7 lakh crore) in 2025, with 2026 worse, rupee returns down 10% from year's high and FPIs taking out close to $28 billion (₹2.6 lakh crore). Gupta notes that investors have become more discerning after two years of modest equity returns and rupee depreciation, with the distinction between strong economy and attractively priced stock market becoming sharper. The recent underperformance improves the entry case, with valuations normalised and foreign positioning at multi-year lows. Looking ahead, India's long-term structural story largely remains in place, though returns are likely to be driven more by earnings growth than valuation re-rating.
According to The Economic Times, Gupta recommends 40-45% in Indian equities through large and flexi-cap funds or AIF or PMS for a ₹5 crore corpus, with 25-30% in fixed income via AAA corporate bonds and target maturity funds. For sophisticated investors, alternatives can represent 10-20% of an India allocation to enhance risk-adjusted returns. Key sectors include banking and financial services, infrastructure and construction, manufacturing, capital goods, defence, electronics, consumer discretionary, and healthcare. Gupta is positive on lenders and capital-market businesses supported by healthy credit growth, digital consumer and platform businesses geared to domestic demand, and contract research and manufacturing services within Pharma. IT services could be an interesting contrarian opportunity after significant declines, though AI impact and global demand recovery pace require monitoring. Defence, energy and capital goods remain compelling long-term themes, but valuations in parts have become rich, making stock selection increasingly important.
As reported by The Economic Times, Gupta addresses common tax misconceptions among NRIs, including the belief that Indian investment income is tax-free, which is not the case. Many investors assume tax deducted at source is their final liability, whereas they may still need to file returns or claim refunds. NRIs pay the same 12.5% LTCG above ₹1.25 lakh and 20% STCG as residents, with NRE deposit interest being fully exempt in India. India has treaties with over 95 countries that cap withholding rates, with interest income that would face 30% TDS domestically may be capped at 10-15% under treaties with countries like UAE, Singapore, US or UK. The tax residency certificate (TRC) is crucial, as it can change the post-tax return on the same Indian instrument by 100-200 basis points annually. Most importantly, NRIs often overlook taxation in their country of residence when investment decisions should rest on post-tax returns across both jurisdictions.
According to The Economic Times, alternatives like PMS, AIFs and private credit play a satellite role rather than core allocation for NRIs. Category II AIFs offer private credit, structured credit, and pre-IPO strategies with less correlated return profiles, but come with 3-5 year lock-ins and lower liquidity. Private credit specifically has become a bigger conversation as NRIs look for yield above traditional fixed income, though underwriting quality and manager track record matter more than in listed debt. For fixed-income products, arbitrage funds can offer a more tax-efficient route to debt-like returns, while diversified performing-credit strategies can provide low- to mid-teen returns by accepting lower liquidity and higher credit risk. For real estate exposure, Gupta recommends REITs over direct investment, capping real estate at 10-15% of the India portfolio as a consumption or emotional-anchor decision rather than primary investment vehicle. USD FCNR(B) deposits at 7.50% p.a. offer attractive yields of over three percentage points over comparable US bank deposits, with sophisticated investors able to enhance returns through borrowing against deposits.
