The global macroeconomic order is becoming increasingly fragmented, shaped by geopolitical tensions, uneven growth across the West and inflationary overhangs. Against the backdrop of this new reality, Indian public equities have outperformed global benchmarks on a risk-adjusted basis, with the Nifty 50 delivering higher returns with lower volatility than major global indices.

What began as an observation evolved into a broader investigation. Our research* on family businesses in the European and Gulf regions reveals a growing consensus: India is no longer optional. Indeed, prior research suggests that whereas family offices in the Gulf region tend to allocate a bigger proportion of funds to domestic real estate and infrastructure, India features prominently – particularly among next-generation leaders – as they explore global diversification.

A combination of structural growth, demographic depth, stable regulatory frameworks and top-performing public equity markets makes the South Asian country an attractive component of a globally diversified portfolio, despite Donald Trump’s punitive 50-percent tariffs on Indian goods exports to the United States and a US$100,000 H1B visa fee that may disproportionately affect Indian services exports to the US. 

If so, why aren’t non-Indian family offices pouring in capital? This apparent disconnect between theory and actual portfolio allocations is the puzzle driving this study. 

The push away from “safe” markets

To understand this disconnect, we interviewed over 20 family office principals, chief investment officers and advisers across Europe and the Gulf, who collectively represent over 60 family offices. The study is further informed by reports by institutional investors such as UBS and HSBC, as well as academic frameworks on international portfolio theory and behavioural finance.

We see several structural shifts pushing global capital to reconsider traditional allocations.  First, global economic uncertainty is triggering a reassessment of what was once considered “safe”. Slowing growth across Western economies, mounting fiscal pressure and heightened political risks are prompting investors to question the robustness of traditional safe havens. 

Second, there is a strong diversification imperative in an increasingly multi-polar world. Geographic diversification is no longer a luxury – it’s a necessity. History shows that in any decade, few economies outperform the rest. Identifying tomorrow’s winners is critical for a resilient long-term portfolio.

Third, as family offices undergo generational transitions, the next wave of decision-makers is moving beyond the comfort of familiar geographies such as the US and Europe. There is growing appetite for enhanced, well-balanced wealth management strategies to preserve and grow wealth across generations.

The Indian appeal

This is where India comes in. As one of the major economies, it presents powerful pull factors that appeal to those seeking diversification and long-term returns. While not the only emerging market of interest, its economic trajectory stands out for its scale, stability and structural momentum.

India is already the world’s fourth-largest economy and is projected to surpass Germany by 2028 to become the third largest, powered by a youthful workforce and rising consumption.

Further, the maturity of India’s capital markets is evidenced by stellar returns with relatively low volatility, as well as structural reforms that have deepened liquidity, broadened investor participation and improved corporate governance.

On the policy and regulatory front, reforms across taxation, disclosure regimes and investor protection standards, as well as improvements in digital infrastructure and market surveillance systems, have created a favourable environment for foreign investors.

However, challenges remain. One important one is the ability of the current government to enact and implement difficult yet needed reforms – for example, in the factor markets for land and labour, the legal system and the innovation ecosystem – which can significantly boost the attractiveness of the Indian economy. 

Another would be managing the volatile trade relationship with the US, one of India’s largest trading partners. Nevertheless, S&P Global Ratings’ recent upgrade of India's sovereign credit rating to BBB after a span of 18 years suggests that, on balance, the markets view India as a significant investment opportunity. Yet a significant allocation gap exists.

Overcoming frictions

Our research reveals five persistent barriers:

• Currency and emerging market risks: Perceptions of higher foreign exchange volatility and emerging-market instability.
• Double taxation and repatriation: Concerns around tax efficiency and the ability to move capital freely.
• Regulatory complexity: Unfamiliarity with India’s evolving regulatory framework can deter investors who have no local partners.
• Outdated perceptions: The India that many legacy family offices knew is vastly different from the reality today, as perceptions may not have kept up with the country’s rapid evolution.
• ESG alignment: Concerns about whether India’s environmental, social and governance standards are consistent with European family office mandates, particularly in sectors like energy and infrastructure.

Interestingly, our interviews reveal that many of these factors are not true impediments but rather reflections of limited exposure, especially when barriers around cross-border complexity and local access are solvable frictions. Several family offices acknowledged their eagerness to unlock the potential of India, provided they were armed with accurate information and trusted local partners. 

In fact, major global players are leading the way. Norway’s Government Pension Fund Global (GPFG), the world’s largest sovereign wealth fund, is increasing its India allocation, joined by Denmark’s and the Netherlands’ public pension funds. Singapore’s sovereign wealth funds Temasek and Government of Singapore Investment Corporation, as well as Saudi Arabia’s Public Investment Fund have also increased their presence. The ecosystem is complemented with the increased physical presence and operations of multinational financial institutions such as Bank of America, JP Morgan, Deutsche Bank, HSBC and DBS.

Meanwhile, another catalyst has been reshaping market access since 2015: India's Gujarat International Finance Tec-City (GIFT City) . India’s only international financial services centre is structured as a special economic zone (SEZ), featuring dedicated tax incentives, streamlined regulation and infrastructure to match the standards of global financial hubs. Sovereign investors such as Abu Dhabi Investment Authority (ADIA) have already committed US$4-5 billion in assets under management via GIFT City, while GPFG’s India allocation stands at north of US$46 billion. 

The family office advantage

Family offices stand on three core pillars: macro-level intelligence, long-term vision and governance, and legacy stewardship. With their ability to see beyond short-term cycles, take calculated contrarian bets and act nimbly, family offices are well-placed to tap into the opportunity presented by India’s economic depth, structural reforms and favourable demographics. 

In an increasingly fragmented world, India offers not just an emerging opportunity – but a grounded, growing and resilient pillar for the decades ahead. For family offices seeking not just diversification but sustained, generational growth, India is not just a fit – it is a strategic complement to their very DNA.