Global investing is no longer limited to institutions or the ultra-wealthy. Today, Indian residents can legally invest in US, European, and other global stocks through regulated platforms. Outward remittances under the Liberalised Remittance Scheme (LRS) rose to about $2.78 billion in September 2025, reflecting continued cross-border financial participation by Indians.
Many investors hesitate not because the process is difficult, but because it feels unfamiliar. Foreign stocks offer diversification, access to global innovation, and reduced reliance on a single economy, while also involving currency movement, taxation, and regulatory compliance. This guide explains the step-by-step process of investing in foreign stocks, along with the key tax implications and practical considerations to keep in mind.
What Are Foreign Stocks & Why Invest Abroad
Foreign stocks are shares of companies listed on exchanges outside India, such as markets in the US, Europe, and Asia. As these companies operate in different economies, returns are shaped not only by their performance but also by global interest-rate decisions, economic cycles, and currency movements.
Looking beyond domestic markets also changes how risk is spread. Indian equities tend to move within a narrower set of drivers. Global markets introduce different forces into the mix, which can reduce reliance on any single market’s direction. Over time, this wider exposure can make a portfolio feel more balanced and less tied to one economy’s ups and downs.
Another important advantage is currency diversification. When the rupee weakens, foreign assets often gain value in INR terms, even if overseas stock prices remain stable.
Step‑by‑Step → How to Start Investing
Starting an Investment abroad is a process, not a leap. Each step exists for regulatory clarity and investor protection. Make sure you follow them with utmost sincerity.
Open & Complete KYC for Global Trading Account
The first requirement is a global trading account with a platform that allows Indian residents to invest overseas. These platforms act as intermediaries, connecting you to international exchanges.
KYC for global accounts is more detailed than domestic investing. Expect to submit:
- Permanent Account Number (PAN) card
- Passport
- Proof of Indian address
- Bank account details
- Foreign Account Tax Compliance Act (FATCA) declaration
International account verification can take a few days. The additional checks are designed to enhance investor protection while meeting global regulatory requirements. Once approved, your account is active and ready to use.
Transfer Funds Under LRS Limits
Outward remittances are governed by the Liberalised Remittance Scheme (LRS), which permits up to $250,000 per financial year for approved purposes, including foreign investments.
Funds are transferred from your Indian bank account to the overseas trading account after submitting a purpose code, PAN verification, and LRS declaration. During this stage, Tax Collected at Source (TCS) applies. Although it increases initial cash outflow, it can be adjusted against your final income tax liability. Once the transfer settles, trading can begin.
Place Buy Orders for Foreign Stocks
Placing international trades is familiar, but it operates under different conditions. Market timings follow the local exchange; settlement cycles may differ, and available order types can be fewer than in Indian markets.
Many platforms offer fractional investing, allowing you to buy portions of high-priced stocks. This improves flexibility and allocation control. Execution is usually quick; adapting to global market behaviour takes longer.
Monitor & Rebalance Your Portfolio
Foreign investing requires periodic review rather than constant tracking. Currency movements, shifting sector weights, and global macro factors influence returns differently from domestic markets.
Regular but deliberate rebalancing helps maintain discipline. If exposure to one region or sector grows disproportionately, adjustments ensure global investments remain aligned with long-term objectives.
Regulatory Basis: Liberalised Remittance Scheme (LRS)
LRS is what makes overseas investing workable for Indian residents. Introduced by the RBI, it creates a clear path for sending money abroad, whether for investing, education, travel, or other approved uses, without having to seek permission each time.
Key points to remember:
- Annual limit: $ 250,000 per individual.
- PAN is mandatory.
- Remittances are tracked cumulatively.
- Investments must be in permitted instruments.
Violating LRS limits or misreporting purpose codes can lead to penalties. Compliance is not optional.
Direct Investment in Foreign Stocks
Direct investment gives you ownership of overseas shares in your name. There are three primary routes.
Via Indian Brokers with Overseas Tie‑ups
This route keeps overseas investing familiar. Platforms focus on simple interfaces, domestic paperwork, and local customer support, which makes getting started easier for first-time global investors. The limitation shows up in depth. Stock availability, order options, and pricing flexibility can be narrower than on international platforms.
Examples: ICICI Direct, HDFC Securities, Groww, INDmoney
Through Global Online Brokers
This approach offers direct access to global markets with greater control. Investors can trade across multiple exchanges, use advanced tools, and often benefit from lower execution costs. Account opening is digital, but the process is less guided. Support may not be India-focused, and fees need closer review.
Examples: Interactive Brokers, Charles Schwab, Firstrade
Via GIFT City Global Access/UDRs
Gujarat International Finance Tec-City (GIFT City) has introduced regulated frameworks that allow access to foreign securities within India’s financial ecosystem. Exchanges such as India INX and NSE International Exchange (NSE IX) support global instruments under this structure.
Unsponsored Depository Receipts (UDRs) represent foreign shares traded within these zones. While liquidity is still developing, regulatory clarity is improving, making this route a potential long-term option for domestic global access.
Indirect Investment Routes
Not everyone wants to pick individual foreign stocks. Indirect routes offer global exposure with less operational complexity.
Investing via International ETFs
International ETFs make global investing easier to approach. They trade like regular stocks, but instead of betting on one company, they spread exposure across a market or theme. Diversification comes built in, management is handled professionally, and costs are clearly visible. Holdings are simple to track, which removes much of the guesswork.
For example, an ETF tracking the S&P 500 gives access to hundreds of US companies at once, while sector ETFs narrow the focus to areas like technology or healthcare.
Foreign Mutual Funds & India ETFs
Foreign mutual funds and India-listed ETFs are investment options that provide international market exposure while remaining within India’s domestic investment framework. They allow investors to participate in global markets without opening overseas accounts or managing foreign transfers, keeping the process familiar and relatively simple.
This convenience does come with limits. Returns may not perfectly match global indices, and regulatory caps or periodic adjustments can influence exposure over time. Examples include the Motilal Oswal Nasdaq 100 Fund, PGIM India Global Equity Opportunities Fund, and India-listed ETFs such as the Motilal Oswal Nasdaq 100 ETF.
Tax Implications for Indian Residents
Taxation is where foreign investing stops feeling abstract and starts becoming very real. Returns matter, but how they are taxed matters just as much. Under Indian tax law, foreign stocks are treated as capital assets.
When these stocks are sold within 24 months, the gains are considered short-term and added to your total income, where they are taxed according to your applicable slab rate.
Dividends from foreign companies follow a similar path and are taxed under “Income from Other Sources.”
Holding the investment longer changes the picture. Stocks held beyond 24 months qualify for long-term capital gains, which are taxed at a flat 12.5%, along with surcharge and cess. In the case of US stocks, capital gains are typically taxed only in India.
If tax is deducted overseas on dividends, Double Taxation Avoidance Agreements (DTAA) allow relief, provided the required documentation is in place.
Costs & Charges
Foreign investing comes with more than just the price of the stock. Individual charges may seem easy to ignore, but taken together, they can quietly shape your final returns. Knowing where these costs sit helps avoid surprises later.
- Brokerage or platform fees are charged on each trade, depending on the market you’re trading in and the kind of services the platform provides.
- Foreign exchange conversion costs arise when money is converted between currencies, affecting both entry and exit prices.
- Bank remittance charges are applied during outward transfers under the Liberalised Remittance Scheme, along with processing and transfer-related fees.
- Tax Collected at Source (TCS) at 20% currently applies to foreign remittances for investments, although this amount can be adjusted against your income tax liability.
- Some platforms may also levy account or custody charges, especially when account balances are low.
Risks & Things to Consider
Foreign investing brings a different kind of balance to a portfolio, but it also asks for a different mindset. There’s no hidden danger here. What changes is the level of attention required.
- Currency risk: A company can do everything right, yet its return may rise or fall simply because the exchange rate moves.
- Regulatory differences: Every market follows its own rulebook, and shifts in those rules can affect how easily trades are placed or settled.
- Market behaviour: Global markets don’t react together; what unsettles one region may have little impact on another.
- Information gap: Financial reports and disclosures may look familiar, but the standards behind them often work differently.
- Operational complexity: Time zones, tax paperwork, and compliance steps add friction that domestic investing rarely brings.
Understanding these layers helps global exposure stay deliberate and controlled, instead of turning into a risk you didn’t sign up for.
Conclusion
Investing in foreign stocks isn’t about chasing what’s popular overseas. It’s about building a portfolio that isn’t dependent on one country, one currency, or one economy. The process may look formal at first, but once set up, global investing becomes just another tool – useful, flexible, and strategic. When done with clarity and discipline, it adds depth to your long-term plan rather than complexity.
FAQs
You can invest by opening a global trading account, completing KYC, sending money abroad under RBI rules, and placing buy orders on US exchanges through approved platforms.
LRS is an RBI framework that lets Indian residents remit money overseas. You can send up to $ 250,000 per financial year for investments and other permitted uses.
Indians can invest through direct international brokers like Interactive Brokers and Charles Schwab, or use Indian brokers with global partnerships such as ICICI Direct, HDFC Securities, Groww, and INDmoney.
Yes. Capital gains and dividends from foreign stocks are taxable in India, following slab rates or short and long-term capital gains rules, depending on holding period.
Yes, you can buy fractional shares of foreign companies. Many global platforms allow investors to buy smaller amounts instead of buying one full, high-priced foreign share.
Yes. Currency movement, global market volatility, regulatory changes, and limited familiarity with overseas companies are key risks to keep in mind.
You transfer funds from your Indian bank using outward remittance under LRS, after submitting PAN details, declarations, and paying applicable bank charges.
