Indian Investors Can Now Buy US Stocks via Zerodha, Groww, and More

The landscape of cross-border investing is set for a massive transformation as India’s top retail brokerage platforms gain regulatory approval to operate through GIFT City. This development will significantly simplify the process for Indian retail investors looking to diversify their portfolios with American equities.

Regulatory Breakthrough in GIFT City

The International Financial Services Centres Authority (IFSCA) has granted crucial clearances to four of India’s largest fintech giants: Zerodha, Groww, Angel One, and Upstox. These approvals allow these platforms to act as intermediaries out of Gujarat’s international finance hub, GIFT City, effectively bridging the gap between Indian domestic markets and US stock exchanges.

The regulatory structure for these players varies based on the type of licence received. Groww and Upstox have been granted Global Access Provider (GAP) licences, which allow them to connect directly with US-based brokers for trade settlements. On the other hand, Zerodha and Angel One have been cleared as broker-dealers. Broker-dealers operate through an indirect settlement model, routing trades through a GAP-licensed partner who then executes the trade with a US broker.

Surging Appetite for Global Equities

This regulatory move comes at a time when Indian investors are showing an unprecedented hunger for international markets. Data from the Reserve Bank of India (RBI) highlights this trend, showing that Indian investors poured approximately $440 million into global equities in March alone—a massive 43% surge compared to the $306 million invested in March of the previous year.

Market volatility and high-profile news also drive this interest; for instance, US stock trading volumes from India recently saw a 20% spike in a single Friday session, fueled by investor excitement surrounding SpaceX's market movements.

Leveraging the Liberalised Remittance Scheme (LRS)

The operational backbone of these new offerings will be the RBI’s Liberalised Remittance Scheme (LRS). Under this scheme, resident individuals are permitted to remit up to $250,000 abroad annually. By utilizing GIFT City as a gateway, these brokerage platforms can streamline the remittance process, making it easier for users to move funds for foreign stock investments within these legal limits.

With Groww and Upstox joining established players like Vested Finance and INDmoney, the competition in the cross-border fintech space is intensifying. Furthermore, the ecosystem in GIFT City is expanding beyond trading; payment companies are also exploring the setting up of wallet services within the zone to facilitate seamless cross-border transfers.

Key Takeaways