US Stock Investing for Indians — How to Get Started via LRS Route

Atmabhan Pandit (Shrikant Bhosale)
Founder, TWIST POOL Labs  ·  TAC Research  ·  NanoCERN Unit, Pune
First-principles finance educator  ·  10+ years in Indian capital markets
 ORCID: 0009-0003-1953-7932

Apple, Google, Tesla, Nvidia. Every Indian who uses these products daily can now own a piece of the companies that built them. The mechanism is RBI & Interest Rates Explained‘s Liberalised Remittance Scheme (LRS) — and it has democratised access to US markets for every Indian investor with a PAN card.

1. The LRS Framework: The Legal Route

LRS (Liberalised Remittance Scheme) allows Indian residents to remit up to $2,50,000 per financial year abroad for permitted current and capital account transactions — including overseas investment in equity and mutual funds.

Permitted investments under LRS:

• Buying listed equity shares on NYSE, NASDAQ, LSE, and other recognised exchanges
• US exchange-traded funds (ETFs)
• US listed bonds
• Opening a US brokerage account

Not permitted: Investing in unlisted companies, real estate overseas (except through permitted funds), and a few restricted jurisdictions.

2. How to Start: Platform Options for Indian Investors

Option 1: Dedicated US Investment Platforms

• Vested Finance: India’s largest US stocks platform. Fractional shares available. Account linked to US custodian (DriveWealth). Mobile-first.
• INDmoney: US stocks + MF + NPS + tracking all-in-one. US stocks via DriveWealth.
• Winvesta: More focused on serious investors. Multiple currency options.

Option 2: Direct US Brokerage Account

• Interactive Brokers: Most sophisticated, lowest cost, global access. Requires more KYC and minimum balance.
• Schwab International: For larger accounts.

Option 3: International Mutual Funds (Indirect Route)

• Domestic MFs with international mandate: Motilal Oswal S&P 500 Index Fund, DSP US Flexible Equity, Franklin India Feeder
• No direct LRS required — invest in rupees through regular MF platforms
• Tax: Slab rate on all gains (treated as debt MF post-April 2023 changes)

3. The Account Opening Process (Vested / INDmoney Example)

1. Download app and complete KYC (Aadhaar, PAN, bank details)
2. W-8BEN declaration (establishes Indian residency for reduced withholding)
3. Add bank account for remittance
4. Remit funds (your bank’s net banking → LRS purpose: investment in overseas securities)
5. Funds credited to US brokerage account (typically 2–3 business days)
6. Buy fractional or full shares

TCS: Remittance above ₹7 lakh/year now attracts 20% TCS (collected by your bank). This is advance tax — fully creditable when you file ITR. Not an additional cost, just advance payment.

4. What to Buy: Building a Simple US Portfolio

For most Indian retail investors, the simplest US portfolio:

For India-first investors: A 5–10% allocation in S&P 500 ETF provides USD diversification and reduces INR concentration risk.

5. Tax on US Investments (Summary)

Note: The 24-month holding period applies (not 12 months like domestic listed equity).

6. Currency Risk: The Rupee-Dollar Factor

When you invest in US stocks, you have two sources of return/risk:

1. US stock performance in dollars
2. INR/USD exchange rate movement

If the rupee depreciates against the dollar (as it has historically — ~3–4% annually), your INR return is higher than the USD return. Over 20 years, this currency effect adds significantly to returns for Indian investors in USD assets.

The Smart Friend’s Verdict

US stock investing via LRS is no longer exotic or complicated. It is a straightforward, What is SEBI?/RBI-compliant path to geographic and currency diversification. For a long-term Indian investor, a 10–15% allocation in a US index fund (S&P 500 ETF via Vested or INDmoney) is a rational hedge against Indian market underperformance and rupee depreciation.

The tax compliance is the only complexity — and that is manageable with a good CA or by carefully following the ITR instructions.

Back to Sovereign Gold Bonds for the gold-side of alternative investments.

Frequently Asked Questions