Indian investors can invest up to $250,000 annually in US stocks through various routes, according to recent market reports. The SEBI cap has just paused mutual funds for international investments, highlighting the need for investors to understand their available options for US market exposure. This regulatory environment underscores the importance of exploring alternative investment channels for international diversification, with mutual funds now bound by a combined industry cap of $7 billion that has filled up through 2026. More investors are turning to the Liberalised Remittance Scheme (LRS) to send money abroad and buy US and other foreign stocks directly, as traditional mutual fund routes become increasingly limited.
As reported by market sources, there are four main routes available for Indian investors to access US stock markets. These routes offer different costs, structures, and regulatory frameworks, allowing investors to choose the most suitable option based on their investment objectives and risk tolerance. The availability of multiple routes provides flexibility for investors seeking US market exposure while navigating current regulatory constraints, with platforms such as Vested, INDmoney, Stockal and Paasa facilitating direct overseas stock investments.
According to market reports, the foreign exchange spread when converting rupees to dollars represents the single largest cost in global investing. Paasa has negotiated competitive forex spreads of ₹0.60 to 0.90 over the mid-market rate with partner banks including HDFC Bank, ICICI Bank, Axis Bank and IDFC First Bank, while platforms like Vested and INDmoney offer spreads up to ₹1.25 (1.2% to 1.5%). Interactive Brokers (IBKR) offers the most competitive trading costs at $0.0035 per share on US stocks, capped at 1% of trade value with a minimum of $0.35 per order, resulting in total costs of 0.03%-0.08% of trade value. Third-party platforms charge higher brokerage fees of 0.1% to 0.25% plus withdrawal fees, making their trading costs several times higher than IBKR's rates.
Since assets are held outside India, foreign assets do not pass on to your family the way they do in India, requiring careful planning for cross-border succession. Most platforms registered in GIFT City allow adding a beneficiary (US equivalent of nominee) to help smooth asset transfer, though this doesn't guarantee seamless inheritance. When the account holder dies, the beneficiary must contact the platform and provide proof of identity, death certificate, and succession documents including nominee KYC, succession certificate, or probate. Without a nominee, validating claimant eligibility becomes considerably harder, requiring legal documents proving estate distribution rights and signed letters of instruction from executors. The US estate tax applies to assets above $60,000 (₹56.6 lakh) at death, with heirs required to file federal estate tax returns within nine months and pay 18% to 40% tax.
Most platforms are registered in GIFT City and regulated by the International Financial Services Centres Authority (IFSCA), with large brokerages Zerodha, Groww and Upstox recently securing IFSCA licenses. The US Securities Investor Protection Corporation covers up to $500,000 of assets per customer if the broker goes under, providing protection for overseas holdings. However, third-party platforms not registered in GIFT City offer no direct regulatory cover in India, being regulated only in the US, leaving investors without Indian authority recourse in disputes. The GST of 18% applies to all forex spread markups, with most platforms folding it into the overall rate, while direct IBKR accounts face higher remittance charges with bank interbank rates of 1.8% to 3% over mid-market rates.
