Global Portfolios Are the New Standard

There are three common routes through which Indian investors access global markets:

1. International mutual funds limited by RBI cap

Several Indian mutual funds allow investors to gain exposure to global equities, but their ability to invest overseas is limited by the RBI’s overseas investment cap.

While these funds are professionally managed and offer a familiar mutual-fund structure for Indian investors, they are restricted in allocation and flexibility due to the RBI’s $7 billion aggregate limit for overseas investments by Indian mutual funds. As a result, they may not fully capture the breadth of global opportunities compared to direct global investing routes.

2. Direct Overseas Investing via LRS Platforms

Platforms such as Interactive Brokers, Vested, INDmoney, and Appreciate enable Indians to directly invest in global stocks and ETFs.

The process typically involves:

• Fully digital KYC using PAN and Aadhaar
• Linking an Indian bank account and setting up an LRS account
• Creation of a US stock wallet (often via US registered broker-dealers like DriveWealth)
• Fund transfers that usually take 8–24 hours

These platforms provide flexibility and direct ownership, but generally come with limited advisory and portfolio-structuring support.

3. GIFT City Funds and Structures

GIFT City has emerged as an important gateway for global investing, offering:

• No RBI capital limits at the fund level and Improving regulatory clarity

However, product depth is still evolving.

Examples include:

• DSP Global Equity Fund, the upcoming Edelweiss China Fund, Parag Parikh UCITS Fund, which provides diversified exposure to international equities through a professionally managed structure.

4.Costs, Charges, and Tax Impact.

Account opening is generally free and currency conversion/interchange fees typically range from 0.40% to 1.5% . Brokerage varies by platform: Some charge 0.25% + GST, while charge 0.05%, subject to minimum fees

Over long holding periods, these one-time and transactional costs are often significantly lower than the long-term impact of INR depreciation avoided through currency diversification.

Taxation: GIFT City vs Direct LRS Investments

GIFT City Funds (e.g., DSP Global Equity Fund):

• Short-term (<24 months): ~42.74% tax at fund level
• Long-term (>24 months): ~14.95% tax at fund level
• Investors receive post-tax NAV, with no further tax reporting

Direct Overseas Investments via LRS (IBKR, Vested, INDmoney):

• Short-term (<24 months): Taxed at individual slab rates
• Long-term (>24 months): 12.5% capital gains tax

Foreign Investments must be disclosed in Schedule FA of the income tax return.

5. How Financial Advisers Can Start with Global Investing.

1. Build the investment rationale first

Start by positioning global investing —highlight diversification beyond India’s ~4% share of global markets, Clearly explain INR depreciation benefits.

2. Begin with simple, broad global ETFs

Depending on client profile, use International Mutual Funds (India-domiciled), GIFT City funds, or direct LRS platforms , Introduce low-cost, diversified ETFs

3. Choose the right route for clients—each balances simplicity, flexibility, and tax efficiency differently.

4. Integrate global exposure into asset allocation

Treat global equities as a core part of equity allocation (e.g., 15–30%) aligned with long-term financial goals.

5. Start small, then scale

Pilot global investing with a few suitable clients, build operational comfort, and gradually expand as processes and client understanding mature.