According to the latest data from the Reserve Bank of India (RBI), overseas remittances by Indians under the Liberalised Remittance Scheme (LRS) fell sharply by 29% in February 2025, totaling $1.96 billion. This marks one of the steepest monthly drops in recent years, raising questions about changing investment behavior among Indian residents.
What Is LRS?
Under the Liberalised Remittance Scheme, Indian residents are allowed to send up to $250,000 per financial year abroad for purposes such as foreign education, travel, medical expenses, gifts, investments in overseas stocks, and buying property.
The LRS is widely used by high-income individuals and families looking to diversify their investments or support relatives studying or living abroad.
Why the Sharp Decline?
The decline in February can be linked to a mix of global and domestic factors:
- Uncertainty in global markets, especially in the U.S. and Europe, has made many investors cautious about sending money abroad.
- Tightening interest rates and inflation in major economies are reducing the appeal of foreign investments.
- A stronger U.S. dollar has made remittances more expensive, discouraging non-essential transfers.
- Regulatory and tax-related changes may also be affecting how and when people choose to remit money overseas.
Experts believe this dip could be temporary, but it does reflect a shift in sentiment as global economic conditions remain volatile.
A Closer Look at the Numbers
Compared to the $2.75 billion sent in February 2024, this year’s $1.96 billion is a significant fall. Categories such as foreign investments and gifts saw the biggest drops, while education-related remittances remained relatively steady — indicating that while discretionary spending is slowing, essential spending continues.
What It Means for You
If you’re planning to invest or support someone abroad, this trend is something to keep in mind. Currency exchange rates, foreign interest rates, and RBI regulations can impact the value and timing of your remittances. Financial planners recommend carefully evaluating foreign investment options and considering hedging currency risks when sending large sums abroad.
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