Indian residents can legally invest in stocks listed in Japan, South Korea, and Taiwan through the Liberalised Remittance Scheme (LRS) framework. According to Vijay Kuppa, CEO of InCred Money, direct investment is permitted in all bonds, equities and funds from these countries under the LRS scheme. Niteen Dongare, Director & CEO of Anand Rathi International Ventures IFSC, confirmed that Indian residents can transfer up to $250,000 every financial year for various purposes, including investment in global markets. However, experts note that while investing overseas is permitted under the LRS, the practical challenges vary significantly across markets.
Each market presents distinct operational challenges for direct investment. As reported by Gaurav Arora, Head of Research at Sahi, Japan is practically accessible via global brokers like Interactive Brokers, but South Korea faces operational restrictions where India-facing fintech tie-ups only support US markets. The Taiwan market is the most challenging, requiring foreign investors to obtain local registration and a tax ID, with almost no retail-facing broker offering smooth access. Karan Aggarwal, Co-founder & CIO of Ametra PMS, highlighted that Japan remains relatively straightforward with direct account opening, while Korea was previously impossible until 2023 but now accessible under a liberalised regime requiring custodian setup.
Experts identify four broad routes for Indian investors seeking exposure to these markets. The easiest route involves international mutual funds and FoFs, though funds are not issuing new units due to RBI restrictions on the combined industry limit of $7 billion. International ETFs offer precise control over entry and exit points through US-listed country-specific ETFs like iShares MSCI South Korea ETF, iShares MSCI Japan ETF, and iShares MSCI Taiwan ETF. International brokerage accounts provide access to nearly 1,500 equity ETFs including 200 international ETFs through global access providers. Additionally, the GIFT City Global Access platform offers access to US stocks, US ETFs, and global markets including China, Taiwan, and South Korea.
Investors face multiple risks when accessing these markets, including currency risk where returns are influenced by movements in Japanese Yen, Korean Won, and Taiwan Dollar against the Indian Rupee. According to Jahol Prajapati from Samco Securities, currency risk is double-layered as investors carry both rupee and yen or Taiwan dollar exposure. Market and cyclical risks are significant as many East Asian markets are tech-heavy, export-driven, and cyclical, amplifying global swings. Tax implications include Long-Term Capital Gains tax at 12.5% for assets held over 24 months, while gains on assets held for 24 months or less are taxed at applicable income slab rates. Investors must also report all foreign assets under Schedule FA and be aware of domestic taxation, US taxation including estate and inheritance tax, and TCS applicable for LRS transfers exceeding ₹10 lakh.
