NSEIX opens doors to U.S. stocks for Indian investors

For decades, buying U.S. stocks has been a Herculean task for most Indian investors. Strict remittance rules, a maze of paperwork, an arduous hunt for reliable and cost-effective overseas brokers, steep account-opening charges and the list of challenges goes on. On top of that, there are lingering concerns over overseas shareholdings’ safety.

With technological advances, financial innovation and regulatory reforms, buying U.S. firms’ shares from India may soon be an app/website away.

Thanks to the NSE International Exchange Global Access (NSEIX-GA). With NSEIX-GA, the line between Dalal Street and Wall Street blurs, bringing some of Silicon Valley’s most valuable firms within Indian portfolios’ reach.

Fully regulated

The NSEIX Global Access IFSC Ltd. is a subsidiary of NSE International Exchange (NSEIX), which in turn is owned by the National Stock Exchange (NSE) of India. It’s a fully regulated entity operating from Gujarat International Finance Tec-City (GIFT City), Gandhinagar, under the regulatory framework of the International Financial Services Centres Authority (IFSCA). It enables investors to access global securities via IFSC ecosystem.

No paperwork

You can now directly buy stocks listed on the New York Stock Exchange (NYSE) and Nasdaq via NSEIX-GA which acts as a super broker.

Any Indian resident above 18 years of age can open an account with the NSEIX-GA for free, through official website nseixga.com and experience fully-digital onboarding. PAN/Aadhaar card details could be automatically fetched via Digilocker with the KYC process done digitally.

No demat account

There is no need to open a separate demat account. Once an account is opened with the NSEIX-GA, individuals can start investing via the app or website. Investors can download NSEIX global access’ mobile app with both Android and iOS versions available. Financial experts say the NSEIX Global Access’ initiative would democratise how Indians gain access to international bourses. The NSEIX-GA, being a government-promoted institution, ensures the security of overseas holdings.

More foreign markets

Currently, the NSEIX-GA is ready with the offerings of U.S. stocks, especially NYSE and NASDAQ with plans afoot to connect with several other big global bourses. It is likely that almost 30 big foreign markets would be included soon. Plans are on to include Europe, the U.K., Japan, Korea and Australian markets too. With this, investors would have huge choice to diversify holdings.

An official said, “For a hassle-free back-end process, we have tied up with many countries as well as foreign brokers. The entire technology platform and the process is designed in a manner that trades would be executed and settled in real time based on the market timings of the respective countries.”

For instance, the U.S. equity trades ideally follow T+1 settlement viz. trades would be settled one business day after execution. Therefore, funds or U.S. Securities become fully settled only after this settlement cycle completes.”

Investors can remit money from their bank accounts to the NSEIX-GA account in Gandhinagar Gift city and once the funds get reflected in the account, investors get trading limits power to buy shares.

Fractional investing

NSEIX-GA allows fractional investing viz. Indian investors can buy a portion/fraction of a U.S.-listed share rather than purchasing the entire stock. This can be particularly useful since many leading U.S. stocks trade at high prices.

Tax, RBI scheme

Capital gains on U.S. equities are not taxed in the U.S under the India-U.S. tax treaty. They are taxable only in India. Dividends attract a 25% U.S. withholding tax which can be later claimed as a foreign tax credit in India. Also, overseas investments are made under the Liberalised Remittance Scheme (LRS) which permits individuals to remit up to $2.50 lakh/financial year. No Tax Collected at Source (TCS) applies on foreign remittances up to ₹10 lakh in a financial year while amounts above this attract TCS. Investors must also report overseas investments and income in Indian tax returns. Investors must, however, approach global markets with careful research, awareness of risks and understanding of cross-border regulations.

(The writer is an NISM & CRISIL-certified Wealth Manager and certified in NISM’s Research Analyst module)