Political and economic engagement between Luxembourg and India has accelerated significantly this year, with ministerial visits and institutional exchanges creating momentum on both sides.
For Himanshu Upadhyay, Chairperson of the Indian Business Chamber of Luxembourg (IBCL), the relationship is now moving beyond untapped potential and entering a period of long-term strategic cooperation. “Business follows leadership,” said Upadhyay.
Luxembourg has quietly become one of India’s most important financial gateways in Europe. Luxembourg-domiciled funds held approximately €52 billion in Indian market assets in 2024, making the Grand Duchy the third-largest source of portfolio investment into India after the United States and Singapore. The figures highlight Luxembourg’s growing role as a structuring and distribution hub for European capital entering India.
The attraction lies in Luxembourg’s reputation for regulatory certainty, investor protection and international structuring expertise. European institutional investors increasingly use Luxembourg vehicles to access India’s expanding infrastructure, renewable energy and digital sectors. “Luxembourg has emerged as a key gateway for European capital into India,” said Upadhyay.
India’s rise is also taking place during a period of global economic uncertainty and supply-chain disruption. The wars in Ukraine and the Middle East, combined with tariff tensions and geopolitical volatility, have encouraged investors to diversify away from concentrated markets. According to Upadhyay, this has accelerated a broader reallocation of global capital toward Asia, particularly India.
Infrastructure, ESG and India’s Expansion
India’s infrastructure transformation has become one of the world’s largest long-term development stories. Massive investments are being directed toward transport systems, renewable energy projects, manufacturing corridors and digital infrastructure while balancing climate-transition objectives. Luxembourg’s sustainable finance ecosystem has therefore become increasingly aligned with India’s long-term ambitions.
The Grand Duchy today hosts roughly €1.6 trillion in sustainable fund assets and accounts for roughly 40% of Europe’s sustainable public-market fund assets. The Luxembourg Green Exchange has surpassed €1 trillion in listed sustainable securities, including several Indian issuances such as green bonds. “Luxembourg is one of the world leaders in sustainable finance, and that works strongly in India’s favour,” said Upadhyay.
One example frequently highlighted is Power Finance Corporation’s green bond listing, which demonstrated how European ESG capital can directly finance Indian infrastructure projects. Luxembourg-based funds are increasingly investing in Indian solar projects, climate-transition infrastructure and sustainable urban transport systems. This alignment between Luxembourg’s ESG expertise and India’s development priorities is becoming one of the strongest pillars of the bilateral relationship.
Manufacturing and supply-chain diversification have also become major drivers of European investor interest in India. India’s Production Linked Incentive (PLI) schemes have attracted billions in investments across electronics, semiconductors, pharmaceuticals and automotive manufacturing. India’s position within the so-called “China +1” strategy adopted by European corporations is increasingly viewed as a long-term structural shift rather than a temporary market trend.
India’s digital economy is creating another important investment corridor between both countries. Luxembourg investors are increasingly exploring opportunities in Indian fintech companies, artificial intelligence, deep-tech startups and digital infrastructure platforms. “India is not just a back-office economy anymore; it is participating in innovation, research and strategic business functions,” said Upadhyay.
Luxembourg as Europe’s Financial Gateway
Founded in 2009, the Indian Business Chamber of Luxembourg has positioned itself as a bridge between both economies. IBCL regularly works with regulators, policymakers, industry associations and private-sector leaders to facilitate dialogue and address perception gaps surrounding India-Luxembourg cooperation. The organisation has notably hosted discussions around Space, Asset Management, cross-border talent, innovation, operational scaling models and investment structures linking Luxembourg to India.
One recurring perception concerns Global Capability Centres established by international firms in India. Critics sometimes argue that such centres remove jobs from Europe, but Upadhyay believes the relationship is more complementary than competitive. India offers technical expertise, scalability and operational advantages that allow Luxembourg companies to expand internationally while maintaining strategic operations in Europe.
For Indian firms, Luxembourg offers several strategic advantages beyond its domestic market size. These include global fund structuring, European distribution capabilities, regulatory credibility and direct access to Europe’s single market. Once approved by Luxembourg regulators, companies gain a level of international trust that facilitates expansion across the European Union.
At the same time, regulatory complexity remains one of Europe’s biggest operational challenges. Luxembourg’s strict compliance environment strengthens international credibility, but it can also create barriers for companies unfamiliar with European frameworks. “Luxembourg’s greatest strength can also feel like its biggest challenge,” said Upadhyay.
Another development increasingly attracting Luxembourg’s attention is India’s GIFT City, the International Financial Services Centre located in Gujarat. Designed as a globally integrated financial hub with its own regulatory framework and tax advantages, GIFT City is emerging as a complementary platform rather than a competitor to Luxembourg. Hybrid structures linking Luxembourg funds with India-facing execution platforms are already being explored by industry participants.
For the next decade, many officials see the partnership becoming deeper, broader and increasingly strategic. India offers Luxembourg access to one of the world’s fastest-growing markets, while Luxembourg offers India a globally trusted financial ecosystem and sustainable finance expertise. “India should be seen as a partner Luxembourg can count on,” said Upadhyay.
This article was published in the 10th edition of Forbes Luxembourg.
Read more articles:
“We prefer portfolios that can work across scenarios”
