Leading Indian brokerages are setting up operations in GIFT City to provide Indian investors with access to global stocks like SpaceX, Apple, Nvidia, and Tesla. This strategic move comes as more Indians seek to diversify their portfolios by investing overseas.
Many brokerages are in various stages of launching this service, with some offering it directly and others through a Global Access Provider (GAP), a company registered in GIFT City that facilitates access to international markets. Investors can open an account via their broker's app or website by completing the online KYC process. They can then transfer funds from their Indian bank account under the Reserve Bank of India's Liberalised Remittance Scheme (LRS), which permits remittances up to $250,000 per financial year for overseas investments.
The service is open to all Indian residents who meet the KYC requirements, and NRIs can also invest through GIFT City. There is no substantial minimum investment requirement, as fractional investing allows investors to start with as little as $1. However, the availability of fractional investing may vary across platforms.
“Brokerages or Global Access Providers (GAPs) typically charge brokerage of around 25 basis points.”
Yogesh Darji, Managing Director, HDFC Securities IFSC
Brokerages or Global Access Providers (GAPs) typically charge a brokerage fee of around 25 basis points. Additionally, investors incur foreign exchange conversion charges levied by banks, generally ranging from 1-1.5% per transaction.
The primary advantage of investing through GIFT City is the regulatory framework, which oversees the companies offering these services and sets the rules they must follow. Beyond this, there is little difference for investors compared to other platforms.
“The tax treatment depends on whether you are a resident Indian or an NRI.”
Nehal Sampat, partner, Price Waterhouse & Co.
Investors are the beneficial owners of the shares they purchase, entitling them to dividends and other benefits. The shares are held in custody by the broker or platform on the investor's behalf.
Background
The establishment of brokerage operations in GIFT City represents a significant step in providing Indian investors with seamless access to international markets. This move aligns with the increasing trend of portfolio diversification among Indian investors, driven by the potential for higher returns and exposure to global economic growth.
Looking ahead, as more brokerages establish their presence in GIFT City, investors can expect increased accessibility to global markets. This development could lead to more competitive offerings and enhanced services for Indian investors seeking international diversification.
