Why Indian Retail Investors Are Losing the Global Wealth Race
Investments🌏➡🇮🇳 Why Indian Retail Investors Are Losing the Global Wealth Race
📊 The Great Indian Investment Divide
🌐 Global Investors
- ✅ Unlimited international exposure
- ✅ Currency hedge options
- ✅ Multi-market diversification
🇮🇳 Indian Investors
- ❌ $1B overseas ETF cap
- ❌ No currency protection
- ❌ Limited to domestic markets
📉 The Numbers Don't Lie
Key Reforms for Indian Investors
Reduction in LTCG/STCG Tax
India is the only major economy that taxes foreign investments. Reducing or scrapping STT (Securities Transaction Tax) would encourage foreign investment and promote economic growth.
Revising LRS Limit
The LRS (Liberalized Remittance Scheme) limit was last revised 10 years ago to USD 250,000. Increasing this limit would provide Indian investors with more opportunities to diversify their portfolios overseas.
Increasing Mutual Fund Investment Limits
The RBI currently imposes a cap on mutual fund investments in overseas ETFs (Exchange-Traded Funds) of $1 billion. Increasing this limit would provide Indian investors with more opportunities to invest in international funds.
Permitting New Investments in International Funds
Permitting fund houses to make new investments in international funds would provide Indian investors with more opportunities to diversify their portfolios and hedge against rupee depreciation.
The message seems clear: retail investors' financial independence isn't a priority.
💰 The Lost Hedge Advantage
With Currency Hedge
₹1,00,000 → $1,351 @74
➡ 10% Growth → $1,487
➡ ₹75/$ → ₹1,11,525
Without Hedge
₹1,00,000 Domestic Investment
10% Growth → ₹1,10,000
➡ ₹1,500 Loss from Depreciation
⏳ Regulatory Roadblocks Timeline
Feb 2022
$7B industry cap reached
➔ International investments suspended
2023 Policy
No STT/LTCG relief despite
$15B+ FII outflows
🔄 What Can Be Done?
Demand these changes:
This was an insightful and well-written post! I really appreciated the depth of analysis and the way you broke down complex ideas into easily digestible points. Your perspective on Retail investment in India was particularly thought-provoking. Looking forward to reading more of your work.
True that! The current set of policies are not just hurting the investors but the overall economy in the long run which isn’t been seen/given due importance in the myopic euphoria and religion driven sentiment. Hope good sense prevails as there’s quite a bit that the country and its bright people can achieve with well intentioned reforms and infrastructure