Beyond metros: Tier 2 and 3 cities, women and young investors to drive India’s next wealth wave, says EY report

India’s next phase of wealth creation is likely to be driven by a broader group of investors, including salaried households in Tier-2 and Tier-3 cities, women, young professionals and Gen Z, according to EY India’s latest report, ‘Wealth Inclusion in India: Expanding Investor Participation Beyond Metro India’.

The report estimates that more than 100 million Indians could enter the long-term investment ecosystem by 2035, supported by increasing participation from smaller cities, younger investors, women and digitally connected households.

Smaller cities expand their investment footprint

The report noted that cities outside India’s top 110 cities currently contribute 12% of mutual fund assets under management. At the same time, districts beyond the top 10 account for 70% of investors registered with the NSE who traded during FY25.

The findings point to a gradual shift in investment participation away from the country’s major metropolitan centres, with smaller cities and districts playing a growing role in India’s capital markets.

Young and female investors gain ground

Younger Indians are becoming an increasingly important part of the investor base. Investors below the age of 30 accounted for 38% of the investor base in June 2026, compared with 23% in FY19.

Women are also increasing their participation, particularly in smaller cities. In B30 cities, women represented 25% of investors in FY24, compared with 20% in FY19, according to the report.

SIPs widen access to mutual funds

Systematic Investment Plans (SIPs) have emerged as another important avenue for expanding retail participation. SIPs now account for 35% of total individual mutual fund assets under management, compared with 19% in FY19.

The report also highlighted the role of micro-SIPs, with investments of around US$2.6, along with distribution partnerships covering more than 250,000 rural touchpoints. These initiatives are helping bring first-time, underserved and rural investors into formal investment channels.

Pratik Shah, National Financial Services Leader, EY India, said: “India’s first financial revolution was about connecting citizens to the financial system. The next one will be about connecting households to wealth creation. While the country has made remarkable progress in expanding access through digital public infrastructure, the ambition now is helping millions of Indians participate confidently in long-term investing.”

“The next wave of growth will come from smaller cities, women investors, young professionals and emerging affluent households, many of whom need guidance as much as they need access,” Shah added.

Digital access grows faster than investment participation

India’s digital payments ecosystem provides a significant indication of the potential investor base. The country currently has more than 550 million active UPI users, while only around 62 million individuals invest in mutual funds and approximately 50 million actively participate in equity markets.

According to EY, this gap suggests that although digital financial access has expanded rapidly, widespread participation in wealth creation remains at an early stage.

Household wealth is gradually shifting towards financial assets

India’s household asset composition is also undergoing a transition. Investable assets reached nearly US$5.2 trillion in FY25, while individual investors now account for 18.7% of the Indian equity market through direct equity holdings and mutual fund ownership.

The report said this represents the highest level recorded in more than two decades. However, despite the increase in retail participation and the growing pool of investable assets, India continues to have significant room to expand participation in formal financial markets.

Vishal Madia, Partner – Wealth and Asset Management, EY India, said: “India has successfully built the digital infrastructure for financial access; the next opportunity is to build the infrastructure for wealth creation. By combining DPI, consented data sharing, AI-driven intelligence and scalable advice, India can create a Wealth Stack that democratizes investing, strengthens financial capability and enables millions of households to participate meaningfully in long-term wealth creation.”