The US stock market's dominance is undeniable, with Nvidia's market capitalisation exceeding India's entire stock market value. According to Viram Shah, CEO of Vested, India represents only 2% of market-cap-weighted global indices despite being around 3.5% of global GDP. The US market accounts for roughly half the world's listed market value and close to 70% of the developed-market index, making it the most attractive destination for global equity diversification. As reported by The Times of India, Apple, Microsoft, Nvidia and Amazon don't trade on Indian exchanges, creating a compelling case for Indian investors to access these companies through direct US market participation.
The most straightforward path for Indian investors is the Liberalised Remittance Scheme (LRS), which permits each resident individual to remit up to $250,000 in a financial year for permissible capital account transactions. According to Tanvi Kanchan of Anand Rathi Share and Stock Brokers Limited, this route allows full ownership of individual US-listed shares with flexibility to build custom portfolios, including fractional investing for high-priced stocks. Several Indian brokerages have established partnerships with US-based custodians and broker-dealers, enabling clients to place orders in US-listed securities without leaving the domestic platform ecosystem. Newer fintech platforms like Vested Finance, INDmoney, Stockal, and Winvesta have emerged to serve this growing demand, offering fractional share investing that meaningfully lowers ticket sizes for high-priced US stocks. Through direct platforms, investors can start with about $1 using fractional shares or run an SIP for as little as $1, making global investing accessible even with modest amounts.
GIFT City offers a more structured route to global investing through entities regulated by the International Financial Services Centres Authority (IFSCA). As reported by The Times of India, investors can access global mutual funds, alternative investment funds (AIFs), international equities, ETFs, bonds, and global portfolios through IFSCA-regulated entities. A GIFT City fund requires $5,000 (roughly ₹4.3 lakh) just to open, with $500 top-ups after that, making it significantly higher than direct investing entry barriers. However, this route offers operational advantages including no Securities Transaction Tax, no stamp duty, and no GST, while transactions happen through Indian-registered brokers under IFSCA regulatory framework with segregated demat accounts. Certain GIFT City products can also provide exposure to US markets without creating direct ownership of US securities, which may help investors avoid US estate tax exposure.
Investors must complete comprehensive KYC, PAN validation, bank verification, and FATCA/CRS declarations along with US tax documentation prior to trading activity. As reported by The Times of India, investors remitting funds under LRS for overseas investment are subject to Tax Collected at Source (TCS) at 20% on amounts exceeding ₹7 lakh in a financial year, which is reclaimable when filing returns. Capital gains classification follows a 24-month holding period threshold, with gains within this window treated as short-term and taxed at applicable income tax slab rates, while gains beyond 24 months are classified as long-term at 12.5% without indexation benefits. Dividend income from US-listed stocks faces 25-30% withholding tax at source in the United States, though investors can claim credit under the India-US Double Taxation Avoidance Agreement. Both routes run on the same underlying: the RBI's Liberalised Remittance Scheme with $250,000 annual limit, with GIFT City not allowing residents to skip LRS requirements despite some marketing suggestions.
The choice between routes largely depends on the investor's experience, investment amount, and preference for convenience versus flexibility. For most retail investors, direct investing offers greater accessibility with lower entry barriers and access to fractional shares starting at $1. It is more suitable for hands-on investors who prefer to build and manage their own portfolios by selecting individual global stocks. GIFT City may be better suited for investors seeking a simple, set-and-forget approach to global diversification through index exposure and who can commit at least ₹4.3 lakh upfront. Experts recommend a 10-15% allocation to US markets as part of diversified equity portfolios, with staggered investment approaches expected to face more currency and rate volatility than usual given current Federal Reserve policy cycles. As noted by Ankur Choudhary of Belong, GIFT City's biggest advantage is convenience, with onboarding, compliance, dispute resolution, and investment access all handled within a familiar Indian regulatory ecosystem.
