India's alternative investment market projected to exceed $2 trillion by 2034

India’s alternative investment market could grow more than five-fold to over $2 trillion by 2034, driven by rising participation from high-net-worth investors and growing demand for higher-yielding assets that are less correlated with traditional investments, according to a report by EY and Julius Baer, as quoted by ANI.

The market is estimated at around $400 billion currently, of which $156 billion is held in SEBI-registered Alternative Investment Funds (AIFs). The rest comprises investments through offshore vehicles, family offices and other unlisted structures, the report said.

The expected growth is also being accompanied by a significant shift in the way India’s family offices invest. Rather than limiting themselves to passive investments, they are increasingly becoming active participants in private markets, taking positions as limited partners in private equity and venture capital funds while also pursuing co-investments and direct investments.

"Family offices have emerged as one of the most transformative forces shaping India's private capital ecosystem," the report said.

Family offices are increasingly drawing on their sector expertise and long-term investment horizons to back emerging businesses and new ventures, the report said.

Their investment appetite is also expanding beyond traditional asset classes into 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 remain an important investment area.

The growing pool of wealth in India is providing further momentum to this trend. The country had more than 19,000 ultra-high-net-worth individuals, with the number projected to cross 25,000 by 2031, according to estimates cited in the report.

The number of family offices has also risen sharply, from around 45 in 2018 to nearly 300 in 2024-25, highlighting the rapid institutionalisation of wealth management among India's affluent families.

The report expects family offices to play an increasingly important role in long-term capital formation as their investment strategies become more sophisticated and institutionalised.

As these investors expand their exposure to alternative funds, private equity, venture capital and pre-IPO opportunities, stronger governance, technology, professional talent and data-driven decision-making will become increasingly important, the report said.

The projected expansion of the alternative investment market underscores a broader shift in India's investment landscape, with wealthy investors increasingly looking beyond traditional assets for diversification, higher returns and greater access to private-market opportunities.