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Understanding global investments: Why Indian investors should consider it

Understanding global investments: Why Indian investors should consider it

Indians have been investing in a global asset for centuries, without even realizing it. China, Russia, Australia, Canada and the United States are the top five gold-producing countries in the world. However, India often features among the top gold-buying countries in the world. Gold has been more popular in India as a behavioral preference rather than a financial investment. Yet, as Indians continue to purchase large quantities of gold, it may be seen as a compelling reason to consider global assets in general.

Like gold, leading global stocks, indices, and currencies are other examples of global assets that have delivered strong returns over time. These are all reasons why global investment makes sense to many Indian investors.

How successful can global investments be?

In a recent discussion, Neil Borate, Editor-in-Chief at “Thefynprint”, mentioned that a Rs. 5 lakh investment in a NASDAQ ETF in 2012 grew to become Rs. 85-90 lakhs in 2026 Stocks such as Apple, Microsoft and NVIDIA have increased consistently in recent years. This has propelled indices like the NASDAQ Composite to phenomenal growth of its own. Real Estate Investment Trusts such as CubeSmart have outsmarted the S&P 500.

Indians have several tried-and-tested modes of investing in overseas assets. Therefore, finding successful global investments can be easier than most laypeople would think. Let us take a look at some ways you can start global investments and understand why you should consider them.

Why go for global investments and how?

  1. Direct investment in foreign stocks: Indian residents can invest up to $250,000 in a year overseas under the RBI’s Liberalised Remittance Scheme (LRS). If you are interested in buying and owning lucrative overseas stocks directly, this is the most direct route available. You can start by opening an account with an international brokerage firm and transferring funds under the LRS. Not only do you get access to the Apples and NVIDIAs of the world, or even ETFs, but also full control over what you want to buy.
  2. International mutual funds: If you want to tap into growing overseas stocks but are unsure which ones to select, you can opt for international mutual funds. These are Indian feeder funds that invest in global equities. It is easy to invest and manage without following the LRS route. Besides, these funds are managed by professionals. This means that all necessary analyses and investments are done by experts.

Apart from dedicated international mutual funds, there are domestic multi-asset funds that combine domestic and overseas investments.

  1. Exchange-Traded Funds (ETFs): ETFs may be a limited selection alternative, but stock exchanges in India list ETFs that track international indices. You will find ETFs clearly indicating that they track the NASDAQ 100 or the Hang Seng, for instance, and you can invest in them easily through your domestic demat account. Not only is it easy to invest, but it also comes at an affordable investment cost compared to mutual funds.
  2. Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs): PMSs and AIFs are sophisticated and professionally-managed vehicles available to global investors. These services often have a higher entry threshold and fee, but they provide access to institutional-grade investment opportunities. PMS providers can be wealth management firms, asset management companies and banks. AIFs are pooled investment funds that are managed by fund managers. It may be a private equity fund, venture capital fund, startup fund, private credit fund and so on. However, only through the regulated Overseas Investment (OI) framework under FEMA, and with restrictions.
  1. GIFT City investments: The new and exciting way to invest globally for Indians is through GIFT City. India’s international financial services center allows Indian residents to invest in foreign assets through Indian brokers – this is called Outbound GIFT City You can consider this mode, as it operates within the Indian jurisdiction and has a simpler regulatory framework. Besides, GIFT City investments also enjoy a tax-efficient structure. All you need to do is open a GIFT City trading account, and you can soon enjoy global investing benefits through overseas stocks, bonds and funds.

Final thoughts

It must be remembered that investing in India alone doesn’t give your portfolio geographical diversification. By opting for global diversification, you can achieve currency-based diversification and reduce your portfolio risk. You gain access to stocks of global leaders like Amazon and Google, as well as to sectors that are underrepresented in India, such as AI and semiconductors. From managed options like mutual funds to direct exposure through LRS and GIFT City, Indian investors can gain global exposure and participate in global economic growth.

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FAQs

How can I invest in global assets through the LRS?

RBI’s LRS allows an investment of $250,000 per individual per year. The investments can be in foreign stocks, ETFs, real estate, and other permitted global asset classes.

How to start global investments without opening a foreign account?

You can invest in global assets through international mutual funds or through global ETFs listed in India. These investment modes are available without the need to open a foreign trading or brokerage account.

How are global investments by Indians taxed in India?

Capital gain tax is applicable on foreign stocks and ETFs, while dividends earned on foreign investments are taxed as per the income tax slab. Earnings from PMS and AIF are taxed as per the structure and holding period. Foreign assets must be declared in the income tax return under Schedule FA.
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