Summary of this article
Direct equity holdings are expected to reach Rs 250 lakh crore by 3035, says Report.
B30 cities, Gen Z investors, digital platforms are driving next wave of retail participation.
Rising SIP culture and long-term holdings signal a more inclusive investor base.
India’s Rs 80-lakh-crore mutual fund industry is headed for its biggest expansion yet. The country’s mutual fund AUM is projected to cross Rs 300 lakh crore by 2035, while direct equity holdings are expected to reach Rs 250 lakh crore, signalling one of the most significant shifts in how Indians save and invest. These projections come from How India Invests 2025, a latest report by Bain & Company in partnership with Groww.
The report says India’s investment ecosystem is deepening at a rapid pace, supported by rising household participation, digital onboarding, stronger investor trust, and a favourable regulatory environment. Mutual fund penetration across households, currently around 10 per cent, is expected to double to 20 per cent in the next decade. Much of this growth will come from mass and mass-affluent households outside the top 30 cities.
Households Are Moving From Saving to Investing
According to the How India Invests 2025 report, Indian households are gradually shifting away from a traditional savings-first mindset and embracing a more investment-led approach. Mutual funds and direct equities have become two of the fastest-growing asset classes in recent years.
Saurabh Trehan, Partner & Head of Bain & Company’s Financial Services practice in India, notes that young and first-time investors, along with those outside major metros, are increasingly choosing market-linked products and longer investment horizons. “With SIP inflows and long-term holdings rising sharply, this evolution will be central to how India finances its growth in the years ahead,” he says in the report.
Long-term behaviour is clearly strengthening. The share of over-five-year holdings in mutual fund AUM has more than doubled from 7 per cent to 16 per cent. For SIPs, over-five-year balances have increased from 12 per cent to 21 per cent, reflecting growing investor confidence and maturity.
Equity Participation to Surge on Digital Access and Changing Behaviour
The report expects 9 crore incremental retail equity investors over the next decade, mainly Gen Z and millennials. This jump will be driven by higher digital adoption, improved financial literacy, and a shift away from speculative trading toward long-term investing.
Mutual fund folios have grown 2.5 times in the past five years, but individual gross flows have risen only 7 per cent. This shows that millions of new entrants are investing with smaller but more systematic contributions. Monthly SIP inflows have grown at an estimated 25 per cent CAGR over the past decade, largely driven by investors aged 18–34.
Younger investors are now shaping India’s capital markets: 40 per cent of NSE-registered investors are under 30, compared to 23 per cent in FY19.
Beyond the Metros: B30 Cities Power the Next Wave
The How India Invests 2025 report highlights that India’s investment boom is spreading well beyond metros. Today, 55–60 per cent of new SIP registrations come from B30 cities. Cities outside the top 110 already contribute 19 per cent of mutual fund AUM, up from 10 per cent in FY19. Women’s participation is rising steadily as well, with their share increasing from 20 per cent in FY19 to 25 per cent in FY24.
Digital Platforms Are Reshaping Investor Behaviour
Digital platforms have become the primary gateway for new investors. According to the report:
80 per cent of new equity investors are onboarded digitally
35 per cent of new mutual fund investors come through online platforms
Nearly half of digital-platform users are from Tier-2+ cities
Gen Z now represents 45 per cent of the investor base on digital platforms. Salaried individuals form the largest group, but participation from self-employed and gig workers is expanding quickly.
Harsh Jain, co-founder and COO of Groww, says digital infrastructure and progressive regulation have “democratised access and fostered deep trust in the ecosystem,” creating a broader and more resilient investor base.
Retail Investors Will Be Key to India’s $10+ Trillion Journey
The report highlights that India’s progress toward becoming a $10+ trillion economy will depend heavily on retail investing, through capital access, wealth creation, and job generation.
Retail participation has deepened liquidity, increased primary issuances, especially for MSMEs, and strengthened the market’s ability to absorb foreign outflows. SME IPO proceeds have risen sharply from Rs 1,800 crore in FY19 to nearly Rs 6,000 crore in FY24, improving access to growth capital.
Retail investing is also expected to create over 7 lakh new jobs across financial services and sectors benefiting from better capital access.
Rakesh Pozhath of Bain says India is entering “a new era of retail investing” that is reshaping capital flows and giving markets unprecedented resilience.
A More Inclusive and Mature Market Ahead
As participation spreads across age groups, genders, and geographies—and as holding periods rise—India’s investment landscape is becoming more inclusive and durable. With a growing SIP culture, broader digital access, and stronger trust in smaller cities, the country is moving toward a more stable, long-term investment environment.
If the projections in How India Invests 2025 hold true, India is on track to build one of the world’s largest and most resilient domestic investor bases over the next decade.
