You wake up, check your phone, and see that the iPhone you’re holding has just posted record profits. You open Netflix to watch a show, and realize they’ve added millions of subscribers. You search for something on Google, and… well, you get the point.
We use these American products every single day. We pay for them in Rupees, but the value is created in Dollars.
For the longest time, Indian investors could only watch from the sidelines as companies like Apple, Microsoft, and Nvidia rallied. But things have changed. Today, buying a share of Tesla is almost as easy as ordering a pizza on Zomato.
If you’ve been wondering how to trade in US market from India or whether it’s even worth the hassle, you aren’t alone. Thousands of Indians are diversifying their portfolios beyond the Sensex and Nifty. Here is why they are doing it, and exactly how you can join them without getting bogged down in jargon.
The “Why”: It’s More Than Just FOMO
It isn’t just about “Fear Of Missing Out” on the latest tech rally. There are practical, mathematical reasons to look West.
1. The Rupee Depreciation Hedge
This is the silent killer of wealth. Historically, the Indian Rupee has depreciated against the US Dollar by about 3-4% annually.
Think about it: If you invest ₹1,00,000 in an Indian stock and it stays flat for a year, you have effectively lost purchasing power globally because the Rupee is weaker. If you invest in US stocks from India, you are holding assets in Dollars. If the Dollar gets stronger, your investment value in Rupees goes up, even if the stock price doesn’t move a cent. It’s a built-in hedge.
2. Diversification Beyond Borders
The Indian market is fantastic, but it’s heavy on banking and finance. The US market offers sectors that are barely present in India—specifically, global-scale technology, AI, and biotech. By adding US stocks, you aren’t betraying the Indian market; you are just completing your pie chart.
3. Buying What You Know
Peter Lynch, the legendary investor, famously said, “Buy what you know.” Look around your room. You likely see an HP laptop, Nike shoes, a Domino’s pizza box, or an Instagram feed (Meta). You are already a consumer of these companies. becoming a shareholder is the logical next step.
The “How”: Apps, Remittance, and Reality
Gone are the days of needing a foreign broker and messy paperwork. Now, domestic fintech apps have smoothed out the process.
Step 1: Choose Your Platform
You generally have two routes:
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Dedicated US Investment Apps: Platforms like Indmoney and Vested are popular. They specialize in this, offering clean interfaces and helpful tax reports.
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Indian Brokers: Apps like Groww and Zerodha (via partners) or bank-based brokers (HDFC, ICICI) also offer US investing.
Step 2: The KYC Process
It’s digital and fast. You will need your PAN card and Aadhaar. Since you are sending money abroad, the compliance is slightly stricter than opening a local Demat account, but it’s usually approved within 24–48 hours.
Step 3: Sending the Money (The LRS Part)
This is where most people get stuck. You cannot just UPI money into your US wallet. You must transfer funds under the Liberalised Remittance Scheme (LRS).
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The Limit: You can send up to $250,000 (approx. ₹2 Crores) per financial year.
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The Process: You add the US broker as a beneficiary in your Indian bank’s NetBanking portal and transfer the funds.
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The Cost: This is the “gotcha.” Banks often charge a fixed fee (₹500–₹1,500) plus a forex spread/markup. Pro Tip: Try to transfer larger chunks (e.g., $500+) at once rather than small monthly amounts to save on these fixed transfer fees.
The Reality Check: Taxes and Charges
Before you rush to buy that Nvidia stock, let’s talk about the boring (but expensive) stuff: Taxes.
1. TCS (Tax Collected at Source)
As of the latest updates (effective Oct 2023 and adjusted in recent budgets), if you remit more than ₹7 Lakhs in a financial year, the government collects 20% TCS.
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Note: This isn’t an extra tax cost; it’s an advance. You can claim it back as a refund when you file your ITR, but your cash flows get blocked until then. (Recent budget proposals for FY25-26 aim to raise this threshold to ₹10 Lakhs—keep an eye on this!)
2. Capital Gains Tax
The taxation rules for foreign stocks changed recently (post-July 2024 budget):
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Long Term (Held > 24 months): Taxed at 12.5%.
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Short Term (Held < 24 months): Added to your income and taxed at your slab rate.
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Crucial difference: Unlike Indian stocks, there is no ₹1 Lakh exemption for LTCG on foreign stocks. You pay tax from the first Rupee of profit.
3. Dividend Tax
US companies withhold a flat 25% tax on dividends paid to Indians. You also have to declare this dividend income in India and pay tax at your slab rate. However, thanks to the Double Taxation Avoidance Agreement (DTAA), you can claim credit for the 25% tax paid in the US so you don’t pay double.
Frequently Asked Questions (FAQs)
Q: Do I need to buy a whole share? Amazon stock is very expensive. A: No! This is the beauty of the US market. You can buy fractional shares. If a stock costs $200 and you only have $10, you can buy 0.05 shares. You still get the same percentage of returns and dividends.
Q: Is it legal to invest in US stocks from India? A: 100% legal. The Reserve Bank of India (RBI) permits this under the Liberalised Remittance Scheme (LRS). You just have to ensure you don’t exceed the $250,000 annual limit.
Q: Can I do SIPs in US stocks? A: Yes, but it’s not automated like Indian mutual funds because of the bank transfer process. You usually have to manually transfer the money to your wallet each month, then set the app to auto-buy.
Q: What happens to my US stocks if the app shuts down? A: Your stocks are usually held by a US-based custodian (like DriveWealth), not the app itself. Even if the Indian app disappears, your stocks remain safe with the custodian, and you can claim them or transfer them to another broker.
Final Thoughts: Start Small, Think Big
Investing in the US market isn’t about abandoning India; it’s about being a global citizen. The volatility is real, and the tax filing requires a bit more attention (you will need to fill the Foreign Assets schedule in your ITR).
However, the ability to own a piece of the companies that define our modern life is powerful. You don’t need millions to start. Thanks to fractional shares, you can start with just enough to buy a coffee—though considering the transfer fees, maybe save up for a nice dinner first.
