$400bn to $20tn: India’s rich fuel investments

New Delhi: India's alternative investment market may expand more than fivefold by 2034, reaching over USD 2 trillion, according to a report from EY and Julius Baer. Currently, India's alternative investment assets stand at approximately USD 400 billion, with SEBI-registered Alternative Investment Funds (AIFs) making up USD 156 billion.

The remainder consists of offshore vehicles, family offices, and unlisted structures. This growth is driven by increased participation from high-net-worth investors seeking higher-yielding, less correlated assets.

The report predicts that India's alternative investment landscape will evolve as family offices transition from passive investing to active roles as limited partners in private equity and venture capital funds. They are also engaging in co-investments and direct investments, leveraging their sector expertise and long-term investment horizons to support emerging businesses and new ventures.

Family offices are increasingly focusing on sectors such as artificial intelligence, climate technology, renewable energy, digital infrastructure, energy storage, semiconductors, electronics manufacturing, cloud services, and data centres. Real estate continues to be a significant investment area.

India's burgeoning wealth pool, with over 19,000 ultra-high-net-worth individuals and the number expected to surpass 25,000 by 2031, is fueling this shift. The report anticipates family offices to play a more substantial role in long-term capital formation as their investment strategies become more institutionalized. Key factors contributing to this growth include stronger governance, technology adoption, professional talent, and data-driven decision-making as these investors expand their involvement in alternative funds, private equity, venture capital, and pre-IPO opportunities.