Investors whose portfolios have scaled to a certain size often look to diversify overseas for their stock and currency exposures. While it is best to have your core exposure to your home market, when it is as promising as India, you may find sector-specific opportunities in other markets that are not represented in India. Sometimes, valuations in other markets are more reasonable for specific sectors and stocks than in India.
So if you are looking to diversify overseas, what are the routes available to you? Here’s a listing with the costs associated with each.
Understanding the regulatory framework
Indian residents can invest in overseas markets through the Liberalised Remittance Scheme (LRS), which permits investments in foreign stocks, mutual funds, ETFs and real estate. It allows individuals to remit up to $250,000 per financial year for permissible transactions. Starting April 1, the threshold for tax collected at source (TCS) on remittances under LRS has increased from ₹7 lakh to ₹10 lakh, with a 20 per cent TCS applicable on amounts exceeding ₹10 lakh for investments and other purposes.
When purchasing international stocks, investors should be aware of two main charges: currency conversion fees and brokerage charges. Banks levy processing fees along with a spread for currency conversion. For example, Kotak Bank charges a processing fee of ₹200 and a 0.5 per cent spread. Brokerage charges vary among brokers, with Interactive Brokers (IBKR) charging between $0.0005 and $0.0035 per share. Investors must also complete KYC procedures and comply with regulatory requirements when opening accounts.
Investment routes for Indian investors
Domestic mutual fund route: Although convenient, this path faces regulatory constraints with only a few of the 74 schemes open for subscription at any given time. Tracking which funds are available for investment can be challenging. You may end up losing out on opportunities to average your holdings over time to take advantage of market falls. In February 2022, SEBI instructed domestic mutual fund companies to halt further investments in foreign stocks to prevent exceeding the Reserve Bank of India’s industry-wide limit of $7 billion on investments in overseas securities and funds. Only some of the funds are now open for subscriptions.
New-age online trading platforms: Platforms such as Appreciate, Vested, Stockal and INDmoney have simplified international investing for Indian residents. Partnering with foreign brokers like Drivewealth, these services offer innovative features including fractional share ownership, seamless INR to USD conversion, systematic investment plans (SIPs) and educational resources. They allow investments starting from as little as ₹1 through fractional shares.
These platforms have streamlined traditionally-complex processes, making account opening, currency remittance and transaction execution more accessible. Currently focused primarily on US equities, their fee structures vary significantly. Vested, for instance, charges a 0.25 per cent brokerage fee on trade amounts, while Appreciate applies either a 0.05 per cent fee or ₹5, whichever is higher.
GIFT City International Exchanges: GIFT City serves as an International Financial Services Centre (IFSC), providing Indian investors with access to global markets.
The BSE International Exchange offers a comprehensive investment solution through its Global Securities Market (GSM) platform. Investors can open accounts with BSE’s INX Global Access platform or through more than 100 empanelled brokers including Anand Rathi, Stock Holding and Geojit Financial Services. This exchange enables Indian investors to trade stocks and ETFs (except Crypto ETFs) listed in over 33 countries across Europe, the Americas and Asia. The platform provides seamless conversion from INR to 22 other currencies. When investors purchase stocks, they are routed to the respective foreign brokers in the countries where they wish to invest, and the stocks are held by custodians in those countries. Account opening, maintenance and custodian charges are nil.
NSE IX at GIFT City currently offers exposure only to top US companies listed on US stock exchanges. The securities are offered as unsponsored depository receipts (UDRs) rather than shares. When an investor initiates a buy order, the US custodian bank creates UDR units from equity shares and transfers them to the custodian bank in GIFT City, which then transfers them to India International Depository IFSC Limited (IIDI), a depository incorporated in GIFT City. NSE plans to add another 70 US stocks and ETFs soon. Investors can transact through brokers such as INDmoney and CMC.
Both allow fractional investing. LRS norms are applicable.
Indian brokers with foreign partnerships: Several domestic brokers have formed partnerships with international counterparts to provide access to global markets. Brokers such as HDFC Securities and Angel One collaborate with Vested, while ICICI Direct partners with IBKR to enable investments in US stocks and ETFs. Most only allow access to US markets.
The advantages include a familiar interface, domestic customer support, integration with existing trading accounts and simplified regulatory compliance managed by the broker. However, limited stock selection and additional charges are drawbacks.
Direct foreign broker route: Brokerage houses such as IBKR and Charles Schwab enable international investing with advanced trading tools and comprehensive research resources. They require independent compliance management and provide access to a wide range of global markets and financial instruments. For instance, IBKR enables trading in over 160 markets from 36 countries, including Europe, Asia and Australia. Charles Schwab offers extended services like 24-hour trading for select securities. This route may be suitable for experienced investors who can manage all processes and possess fair knowledge of global equity markets.
Apart from gaining a macro understanding of foreign markets, investors need to navigate the unfamiliar landscape of foreign tax systems and KYC requirements. Understanding the complete fee structure is essential, from brokerage commissions to currency conversion costs.
Published on April 26, 2025
