Another avenue for Indians to invest in US stocks
Indian investors have a reason to be cheerful as now, the access to the US stock markets is going to be a reality for them! This post consists of all the relevant information related to the matter mentioned above.
The wait to buy US stocks from India may soon be over. Both BSE and NSE, the two leading stock exchanges of India have announced their plans to make available an international trading platform for Indian investors. NSE International Exchange (NSE IFSC), a wholly-owned subsidiary of National Stock Exchange of India Ltd (NSE), will soon provide the necessary platforms to carry out the trades. The entire trading, clearing, settlement, and holding of US stocks will be under the regulatory structure of IFSC Authority.
It is a first-of-its-kind initiative at IFSC, where Indian retail investors will be able to transact on NSE IFSC platform under the Liberalised Remittance Scheme (LRS) limits (which permits the resident individuals to remit up to USD 2,50,000 per financial year for any permitted current or capital account transaction) as per Reserve Bank of India (RBI).
The model will not only provide an additional investment opportunity to the Indian investors but also, make the entire process of investment easy and at a low cost. Investors will be provided with an option to trade in fractional quantities as compared to the underlying shares traded in the US markets.
All the trades will also be covered under the investor protection framework at NSE IFSC, where investors will be able to hold the depository receipts in their own Demat accounts opened in Gujarat International Finance Tec-City (GIFT City) and would be entitled to receive corporate action benefits pertaining to the underlying stock.
NSE IFSC will announce the operational details shortly and launch the product at the earliest. Meanwhile, depositories, banks, and brokers have already started working with NSE IFSC to enable these investment products for Indian investors.
Before you start buying US stocks, you will have to buy dollars from your Indian Rupee and keep LRS limits prescribed by RBI in your mind, which is up to $250,000 in each financial year. At an exchange rate of Rs 74 to a dollar, it is worth about Rs 1,85,00,000 or Rs 1.85 crore.
Amazon shares are currently trading at around $3,300, which means that you need to invest over Rs 2 lakh to buy one share of the company. However, that may not be required as all international trading platforms and even NSE IFSC will allow their own US shares through fractional ownership. There could be depository receipts issued by IFSC exchanges anywhere between $3 and $5 to make buying US stocks affordable to Indian investors.
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