How to Invest into Foreign Stock Markets

Investing into foreign markets is allowed as per the Liberalized Remittance Scheme (LRS). LRS is a scheme introduced by the RBI that allows Indian residents to remit around INR 2 Cr. per financial year for various purposes, including investment in foreign stocks and securities.

Direct Investment through Foreign Brokers
● Open an account with global brokers like Interactive Brokers, TD Ameritrade, or Charles Schwab.
● These platforms offer direct access to U.S. and other international stock markets.

Indian Platforms with Global Access
● Many Indian brokers partner with foreign platforms to offer global stock investments. Examples include:
○ INDmoney
○ Vested Finance partner Zerodha
○ NSE IFSC
○ Stockal partner HDFC Sec
○ Interactive Brokers partner ICICI Direct
● These platforms often simplify the process and handle remittances directly.

Mutual Funds and ETFs
● Indian investors can invest in mutual funds or ETFs that track international indices like the Nasdaq 100 or S&P 500.
● Examples include:
○ Motilal Oswal Nasdaq 100 ETF (direct exposure to Nasdaq 100).
○ Edelweiss US Technology Equity Fund of Fund (invests in US technology funds).
○ Franklin India Feeder - US Opportunities Fund (tracks S&P 500 companies).

No Foreign Account Required:
● This investment option doesn’t require opening foreign brokerage accounts or remitting funds abroad, making it accessible and convenient for Indian investors.
Ideal for Passive Investors:
● These funds/ETFs are well-suited for passive investors seeking international diversification without actively managing foreign equities.

Whether you choose a foreign broker or an Indian platform, you’ll need to:
○ Complete KYC with your PAN, Aadhaar, and proof of address.
○ Provide your bank details for fund transfers.

● Remit money to your trading account using RBI-approved channels.
● Indian platforms typically integrate remittance services directly.
● Do consider charges, such as forex conversion fees and remittance costs.

● Look for companies or ETFs based on:
○ Financial health
○ Historical performance
○ Industry trends
○ Growth potential

● Tools like Yahoo Finance, Bloomberg, or broker-provided insights can assist with research.

Dividend Tax: Dividends from foreign stocks are taxed in the company's home country. However, India allows you to claim credit under the Double Taxation Avoidance Agreement (DTAA).
● Capital Gains Tax: Gains from selling foreign stocks are taxable in India. Short-term and long-term tax rates apply, depending on the holding period.
● Consult a tax advisor for accurate filing.

1. Start Small: Test the waters with a small investment amount.
2. Diversify: Spread investments across sectors and geographies to reduce risks.
3. Track Forex Rates: Currency fluctuations can impact your overall returns.
4. Use Trusted Platforms like Zerodha, ICICI Direct, NSE IFSC, and INDmoney simplify the process.
5. Stay Informed: Regularly follow international news and financial trends.

By following this process, Indian investors can unlock global investment opportunities and build a robust, diversified portfolio.