How to Invest in the US Stock Market from India: A Complete Guide for 2025

Diversification is often called the only free lunch in investing, and rightly so. As Indian investors look to broaden their portfolios beyond domestic markets, the US stock market has emerged as a popular destination. In this guide, we’ll explain how Indian investors can access US stocks, the available investment routes, tax implications, and critical considerations before you begin.

Why Should Indians Invest in US Stocks?

1. Geographical Diversification

Investing in US markets allows Indian investors to diversify beyond domestic equities. The US stock market is the most developed and liquid market globally, offering exposure to global leaders and innovative companies.

2. Currency Advantage

Investing in USD-backed assets can provide a hedge against INR depreciation. As the US dollar appreciates against the Indian rupee, your investment value can grow independently of stock performance.

3. Access to Global Giants

The US markets host some of the world’s most influential companies like Apple, Amazon, Microsoft, and Meta. Investing in these market leaders can enhance your portfolio’s quality and resilience.

Indian investors have multiple ways to invest in the US stock market:

1. Through Mutual Funds

Indian Asset Management Companies (AMCs) offer international mutual funds that invest directly or indirectly in US equities.

Direct Mutual Funds: These funds purchase US stocks directly.
Examples: Franklin India Feeder – Franklin US Opportunities, ICICI Prudential US Bluechip Equity Fund.

Key Advantage: Easy to invest, professional management, and no need for a foreign trading account.

2. Through Exchange-Traded Funds (ETFs)

Indian investors can access US markets via ETFs that track major US indices.

Examples:

Motilal Oswal Nasdaq 100 ETF
Mirae Asset NYSE FANG+ ETF

Note: US-focused ETFs in India are limited and may trade at a premium to their Net Asset Value (NAV), especially due to regulatory investment limits.

3. Direct Investment in US Stocks

You can invest directly in US-listed companies by opening an overseas trading account through platforms like:

INDMoney
Interactive Brokers
HDFC Securities
Vested

Caution: Be mindful of transaction charges, conversion fees, and platform security. Prefer reputed platforms and check for hidden costs, especially for regular investments like SIPs.

Important Regulatory Considerations

RBI Limit on Mutual Fund Overseas Investments: The total overseas investment limit for the Indian mutual fund industry is $7 billion, with a cap of $1 billion per AMC. Due to these caps, fresh allocations in US mutual funds may face delays or restrictions.

Taxation on US Stock Investments

1. Dividend Taxation

India and the US, Indian investors can claim credit for taxes paid in the US while filing their Indian income tax returns.

2. Capital Gains Taxation

Short-Term Capital Gains (STCG): If held for less than 24 months, taxed as per your income slab.
Long-Term Capital Gains (LTCG): If held for more than 24 months, taxed at 12.5% without indexation.

3. Tax Collected at Source (TCS)

No TCS is applicable for remittances under LRS up to $25,000. Beyond that, TCS at 5% (or the applicable rate) is collected.

Which Option Should You Choose?

Beginners: Mutual funds are a great starting point. They provide professional management and minimize the complexity of direct stock investing and tax filings.
Experienced Investors: For those who are comfortable researching stocks and navigating foreign investment rules, direct investment offers better control and access to a broader range of opportunities.

Always consult a financial advisor to align your international investing strategy with your risk profile and long-term goals.

Final Thoughts

Investing in the US stock market can be an excellent way for Indian investors to achieve global diversification and benefit from exposure to the world’s largest companies. Whether you choose mutual funds, ETFs, or direct stocks, understanding the taxation rules, regulatory guidelines, and platform charges is crucial for making an informed decision.

Make sure to evaluate your investment horizon, risk appetite, and financial goals before entering the US markets.