How to Invest in US and Global Stocks From India

For decades, owning a slice of Apple, Microsoft or a global index was awkward for an Indian investor. Today it is genuinely easy — sometimes as easy as buying any domestic mutual fund. The harder questions are no longer "how" but "how much", "through which route", and "what does it do to my tax return". This article works through all three.

The case for some international exposure is straightforward. Indian equity is a wonderful long-term engine, but it is a single country, dominated by a handful of sectors. The world's largest technology, healthcare and consumer franchises are mostly listed abroad. A modest global allocation diversifies away from concentration in one economy and one currency. The case against overdoing it is equally simple: this is a satellite holding, not the core of an Indian investor's portfolio.

The two broad routes

Everything available to a resident Indian investor falls into one of two buckets.

Route 1 — India-domiciled funds that invest abroad. You buy units of an Indian mutual fund (in rupees, through your usual platform), and the fund does the foreign investing for you. This includes feeder funds (an Indian fund that simply channels your money into a larger overseas fund) and global index funds / fund-of-funds that track indices like the S&P 500 or Nasdaq 100. You never open a foreign account, never deal with LRS, and the fund handles the mechanics.

Route 2 — Direct overseas investing. You open an account with a broker that offers access to US or global exchanges, remit money abroad under the RBI's Liberalised Remittance Scheme, and buy individual foreign shares or ETFs yourself. This gives you full control and the widest universe, but adds remittance steps, foreign-account reporting, and more involved tax handling.

Feature	India-domiciled global fund	Direct overseas broking
How you invest	Rupees, normal MF account	Remit USD via LRS, foreign broker
Paperwork	Minimal (like any MF)	LRS remittance + foreign account
Investment universe	Whatever the fund holds	Almost any listed foreign security
Currency conversion	Handled inside the fund	You convert at remittance
Foreign asset disclosure	Generally not required of you	Typically required in your ITR
Best for	Simplicity, small allocation	Control, stock-picking, larger sums

For the large majority of investors who simply want broad global exposure, Route 1 is the sensible default. Route 2 makes sense if you specifically want to own individual foreign companies or build a portfolio that no Indian fund offers.

Understanding the LRS

The Liberalised Remittance Scheme is the RBI framework that lets a resident individual send money abroad. Under current rules, the limit is USD 250,000 per financial year, cumulative across permitted purposes — so the same allowance covers overseas travel, education, gifts and investment combined.

Two practical notes. First, foreign remittances can attract tax collected at source (TCS) above certain thresholds; this TCS is not an extra tax you lose — it is adjustable against your overall tax liability — but it does affect cash flow. Second, both the LRS limit and the TCS rules are revised periodically, so confirm the latest position on the RBI's site before sending money. Route 1 (India-domiciled funds) does not use up your personal LRS limit, which is one of its quiet advantages.

Currency: the return driver you cannot ignore

When you invest abroad, your return has two parts: how the underlying asset performs in its own currency, and how the rupee moves against that currency.

Suppose you invest in a US index fund and, over a year, the index rises 10% in dollar terms. If the rupee also weakens by 3% against the dollar over the same period, your return in rupees is roughly 13% — the asset gain plus the currency gain. If instead the rupee strengthens 3%, your rupee return shrinks to about 7%.

Over long periods, the rupee has tended to depreciate gently against the dollar, which has historically been a tailwind for unhedged foreign holdings. But this is not guaranteed in any given year, and currency can move sharply either way. The honest framing: currency exposure is part of why you diversify globally — it spreads your wealth across more than one monetary regime — so for a long-term satellite allocation, most investors simply accept it rather than paying to hedge it away.

A word of caution against leaning too hard on the rupee-depreciation story, though: past depreciation is not a promise of future depreciation, and treating it as a guaranteed extra return is a mistake. There can be multi-year stretches where the rupee holds steady or even strengthens, during which your foreign holdings get no currency tailwind at all and may face a headwind. Build your expectations around the underlying asset's return and treat any currency gain as a bonus you cannot count on, rather than as a core part of the investment thesis. This also argues against borrowing or stretching to invest abroad purely on a currency bet — the currency can humble that view quickly.

A worked example: a 10% global allocation

Suppose you have a ₹20,00,000 portfolio and decide that 10% — ₹2,00,000 — should be international, held in a global index fund through Route 1. You add to it with a modest monthly contribution.

Assume the global allocation compounds at an assumed 11% in rupee terms (combining asset growth and gentle rupee depreciation) over 15 years, while you also run a small ₹3,000 monthly SIP into the same fund. These are illustrative assumptions, not forecasts.

Component	Amount	Assumed rate	Approx value after 15 years
Initial global allocation	₹2,00,000	11%	~₹9.6 lakh
₹3,000/month SIP	₹5.4 lakh invested	11%	~₹13.6 lakh
Total global sleeve	—	—	~₹23.2 lakh

The exact figures matter less than the principle: a small, consistent global allocation can grow into a meaningful diversifier without ever dominating the portfolio. You can model your own lump sum at different rates in a lumpsum calculator and your monthly contribution in a SIP calculator, remembering that the rupee-return assumption already bakes in a currency guess that may not hold.

Tax: more involved than domestic equity

This is where global investing demands care.

Route 1 (India-domiciled global funds): You are simply holding an Indian mutual fund, so you report it like any other fund — gains taxed per the rules for that fund category, and no separate foreign-asset disclosure required of you personally. The tax treatment of international funds has shifted with changes to debt-fund and equity-fund definitions, so confirm the current category and holding-period rules for the specific fund.

Route 2 (direct foreign shares): Gains on directly held foreign shares are generally taxable in India based on holding period, dividends from foreign companies are taxable here, and — importantly — foreign assets typically must be disclosed in the relevant schedule of your income tax return regardless of whether you sold anything. Missing this disclosure is a common and avoidable error. There may also be tax withheld at source in the foreign country (for example on US dividends), with relief available under tax treaties.

The headline lesson: the simpler the route, the simpler the tax. If tax-return complexity bothers you, that alone is a strong argument for Route 1. Either way, verify the current rules with a tax professional, because this is an area that changes.

A note on capacity limits in feeder funds

There is one practical wrinkle in the Route 1 (India-domiciled fund) path that catches investors off guard: capacity. India has regulatory limits on the aggregate amount the domestic mutual fund industry can invest overseas. When those limits are approached, fund houses sometimes have to pause fresh subscriptions into their international feeder funds and global index funds — temporarily, until headroom opens up again.

What this means in practice is that the international fund you planned to start a SIP into may, at times, not be accepting new money, or may cap lump-sum investments. This is not a sign that anything is wrong with the fund; it is an industry-wide constraint. But it does mean you should not treat the existence of a global fund today as a guarantee that you can keep adding to it on demand.

Two sensible responses. First, do not build a plan that depends on always being able to pour large sums into one international feeder fund at will. Keep international as a modest sleeve so any pause is a minor inconvenience, not a derailment. Second, if continuity matters a great deal to you, the direct overseas route (Route 2) under your own LRS limit is not subject to the industry's aggregate cap, which is one of its quieter advantages alongside the wider investment universe. Check the current status of any fund before assuming it is open, and verify the prevailing overseas-investment limits on the official resources, as both the limits and which funds are open change over time.

How much should you allocate?

There is no single correct number, but some sensible guardrails. International exposure is a diversifier, not the core of an Indian investor's portfolio — your spending, liabilities and life are in rupees. A common range people settle on is somewhere between 5% and 20% of the equity portion, with the lower end suiting those who want a gentle hedge and the upper end suiting those with a strong conviction in global franchises.

Crucially, this should slot into a deliberate plan rather than be bolted on. Decide your overall equity-versus-debt split first, then carve out the international slice within the equity portion. Our guide to asset allocation in India covers how to think about that top-level split, and reviewing the whole picture in a net worth tracker helps you see whether your global sleeve has drifted too large or too small over time.

Common mistakes

Confusing the two routes — and their tax consequences. Investors sometimes open a direct foreign broking account for convenience, not realising it triggers foreign-asset disclosure obligations they then forget to meet. If you do not need direct stock-picking, the India-domiciled fund route avoids the whole issue.

Over-allocating to a single foreign market. Putting 40% of your equity into US technology because it has done well recently is concentration, not diversification. A global allocation should be a measured satellite, sized so a bad decade abroad does not derail your rupee-denominated goals.

Ignoring currency in expectations. Some investors expect their foreign fund to mirror the dollar index they read about, then are confused when rupee returns differ. Always remember your return is the asset move plus the currency move.

Forgetting the LRS limit is shared. The USD 250,000 allowance covers all remittance purposes combined. A large overseas tuition payment plus investing can bump against it in the same year. Plan remittances with the full annual usage in mind.

Chasing themes through expensive feeder funds. Narrow thematic global funds can carry higher costs and concentration. For most people, a broad global or US index fund is a cheaper, steadier way to get the exposure — consistent with the case for index funds over active funds.

What to do next

• Decide your purpose first: broad diversification (favours Route 1 funds) or owning specific foreign companies (favours Route 2 direct broking).
• Set a target international allocation as a percentage of your equity — for most investors a modest single-digit to low-double-digit share is plenty.
• If using Route 1, pick a low-cost broad global or US index fund and add to it through a regular SIP rather than timing entries.
• If using Route 2, confirm the current LRS limit and TCS rules on the RBI site, and set up a process to disclose foreign assets in your tax return every year.
• Treat currency as part of the diversification story; do not expect rupee returns to equal the foreign-currency index move.
• Review the global sleeve once a year inside your net worth tracker and rebalance if it has drifted well away from your target.
• Verify the current tax treatment, LRS limit and disclosure requirements with a tax professional and the official RBI and SEBI resources before investing — these rules are revised periodically.

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Disclaimer: This article is for educational purposes only and is not personalised financial advice. Investments are subject to market risk. Consult a SEBI-registered adviser before investing.