Investing in U.S. Stocks from India: How, Where, and What to Pick
Punit Bhandari
Punit Bhandari, is a Qualified Chartered Accountant-
Senior Partner, M/s Bhatia Bhandari Associates
His Expertise: Taxation, Audits, SAP Implementation & Non-Resident Investment Solutions
Introduction
Indian investors are increasingly exploring opportunities to invest in U.S. stocks for diversification, currency benefits, and exposure to global leaders in innovation. With the right applications and platforms, the process has become significantly easier.
How to Invest in U.S. Stocks from India
You can invest via two main routes:
A. Direct Investment (LRS Route)
Under the Liberalised Remittance Scheme (LRS), the RBI allows Indian residents to remit up to $250,000 per financial year abroad for investments.
- Choose a Platform: Sign up with a broker that allows US stock investing (more below).
- Complete Know Your Customer (KYC) requirements, including PAN, Aadhaar, and bank details.
- Fund Your Account: Transfer U.S. dollars via your Indian bank (which may require a Form A2 declaration).
- Start Investing: Buy individual stocks, ETFs, or fractional shares.
B. Indirect Investment
Invest in Indian mutual funds or ETFs that focus on the U.S. markets.
- No need to handle forex, remittance, or international tax.
- Lower minimum investment.
- Ideal for beginners or passive investors.
Why Access US Stocks?
- Global diversification: U.S. companies frequently lead in innovation, particularly in fields such as technology, biotechnology, and artificial intelligence.
- Currency benefit: Exposure to the U.S. dollar may yield potential gains from INR–USD exchange rate movements.
- Mature capital markets – Liquidity, regulatory stability, and depth of opportunities.
Apps / Platforms That Help Indian Investors
Here are some of the leading platforms that allow Indians to invest in US stocks and ETFs:
- INDmoney: Provides a free U.S. stock account, fractional share investing, systematic investment plans (SIPs) in U.S. stocks, and integrated INR–USD transfers.
- Vested: Provides access to more than 10,000 U.S. stocks and ETFs, fractional shares, and curated portfolios.
- Interactive Brokers: Global access, advanced tools, great for experienced investors.
- Groww: Simple interface, now offers US stocks and ETFs too.
- ICICI Direct (and other Indian brokers): Trusted names, though usually with higher fees.
Each has different charges, remittance processes, and features – so compare before choosing.
Understanding Share Classes
When encountering Class A, B, or C shares, note that these represent different voting structures.
- Class A: Publicly traded, usually 1 vote per share.
- Class B: Often held by founders/insiders, higher voting rights (not usually available to retail).
- Class C: Non-voting shares (e.g., Alphabet’s GOOG).
Indian investors typically purchase whichever class is publicly listed (such as AAPL, AMZN, GOOGL, or GOOG).
What are ETFs?
An ETF (Exchange Traded Fund) holds a basket of stocks and trades like a stock.
Benefits:
- Diversification across many companies.
- Lower fees compared with purchasing multiple individual stocks.
- Exposure to indices like S&P 500 (VOO), Nasdaq-100 (QQQ), or sector-specific funds.
Mega-Cap / Large-Cap / Small-Cap Stocks
- Mega-Cap: Very large companies such as Apple and Microsoft, which are generally stable, influential, and considered long-term investments.
- Large-Cap: Large companies with both stability and growth potential, such as Alphabet and Nvidia.
- Small-Cap: Smaller firms, higher upside but also higher volatility (Shopify, mid-cap growth companies).
Sample Stocks & ETFs Across Categories
1. Mega-Cap:
a. Apple (AAPL) – strong brand, steady cash flows.
b. Microsoft (MSFT) – leader in cloud, AI, enterprise solutions.
2. Large-Cap / Growth:
a. Nvidia (NVDA) – dominating GPUs & AI chips.
b. Alphabet (GOOGL) – ads, cloud, search, innovation bets.
3. Small / Mid-Cap:
a. Shopify (SHOP) – growth in the e-commerce platform space.
4. ETFs:
a. Vanguard Mega Cap ETF (MGC) – exposure to the largest US companies.
b. Invesco QQQ (QQQ) – tracks Nasdaq-100, tech-heavy.
c. Vanguard S&P 500 ETF (VOO) – diversified large-cap exposure.
Sample Portfolio Mix (Illustrative)
- 40-50% Mega & Large-Cap stocks/ETFs (stability + growth).
- 20-30% Growth stocks (higher return potential).
- 10-20% Small / Mid-Caps (higher upside, higher risk).
- 10-20% ETFs (broad diversification).
Risks & Considerations
- Currency risk: Fluctuations in the INR–USD exchange rate.
- Fees – conversion, brokerage, remittance charges.
- Regulatory & Tax – US dividend withholding tax, Indian capital gains tax, foreign asset disclosure in ITR.
- Volatility – especially in growth and small-cap stocks.
Conclusion
Investing in US stocks from India has never been easier. Platforms like INDmoney, Vested, Groww, Interactive Brokers, and ICICI Direct simplify the process by offering international accounts, fractional shares, and ETF access.
By combining Mega-Cap stability, Large-Cap growth, Small-Cap potential, and diversified ETFs, investors can construct a balanced portfolio that fosters wealth creation while managing risk.
- Investing in US stocks from India is legal and feasible under the LRS, but there are limits (US$250,000/year), TCS, and compliance requirements.
- Use a credible broker or fintech platform that supports US equities/ETFs, with a clear fee structure and good customer support.
- Tax considerations are critical: U.S. dividend withholding tax, Indian capital gains and income taxes, Double Taxation Avoidance Agreement (DTAA) benefits, and foreign asset reporting requirements.
- Diversification (both in stocks/sectors/themes & via instruments like ETFs) helps manage risk.
- Be conscious of currency risk and all hidden costs (foreign exchange, remittance, brokerage).
- Have a clear goal and time horizon; match your allocation accordingly (aggressive vs balanced vs income).
For any clarifications or queries, please feel free to reach out to us at admin@fintracadvisors.com
Disclaimer
The content published on this blog is for informational purposes only. The opinions expressed here are solely those of the respective authors and do not necessarily reflect the views of Fintrac Advisors. No warranties are made regarding this information’s completeness, reliability, or accuracy. Any actions taken based on the information presented in this blog are solely at the reader’s risk, and we will not be liable for any losses or damages resulting from its use. It is recommended that professional expertise be sought for such matters. External links on this blog may direct users to third-party sites beyond our control. We do not take responsibility for their nature, content, or availability.
