How to Invest in Foreign Stocks as an Indian individual?

To grab opportunities from foreign markets and to know how to invest in your favorite multinational company, you need to read this blog until the end.

Under the Reserve Bank of India's 'Liberalised Remittance Scheme', an Indian can only invest up to $250,000 a year in international stocks. According to the International Monetary Fund, India's share in the world GDP as to purchasing power parity (PPP) is nearly 8%. It shows the contribution of Indian investors to the world's economic growth.

The ways to trade on foreign stock exchanges.

1. Brokerages:

There is a large number of Indian brokers that have partnerships with foreign brokers to provide investment facilities on foreign stock exchanges.

Example: HDFC Bank, ICICI Bank, and Axis Bank.

Many foreign brokerage firms have a direct presence in India like Brokers LLC. Subsequently, a US Securities and Exchange Commission is a registered investment advisor for stocks, Exchange-traded funds, and other portfolios for Indian investors.

2. The Holding Method:

US brokerages' holding can be different from India's. Indian stocks you invest in, are held in your name in a Demat account. And, in the US, stocks can be held by a third party in the name of the broker.

Important Notes:

- Law: Since an Indian investor can only invest up to $250,000 a year under RBI's LRS, one can transfer money to a foreign broker through an Indian bank under LRS. In addition, you can visit your bank branch and fill the relevant form and KYC.

- Currency: Since the investment in foreign shares is made by converting your rupees to a foreign currency, you should remember risks and rewards. The value of the portfolio can rise and fall according to the rupee's movement against that foreign currency. Transferring money will attract currency transfer charges, hence, long-term investments are a good option against trading.

- Tax: Same as mutual funds in India taxed, capital gains made through foreign funds and exchange-traded funds are taxed. 3-year holding time treated as short term, while more than 3-years holding time treated as long term. Do not forget to reveal the value of foreign assets and income each year while filing for income tax.

Source: LiveMint

Click me to access the full course