Indian investors will be able to invest directly in shares of major American companies like Facebook and Google from Thursday, March 3. This can be done through NSE IFSC, a subsidiary of NSE. Currently, Indian investors buy shares of US companies through designated online brokers with the permission of the US and Indian regulators. These brokers allow ownership of up to 1 million shares of US stock.
Initially, Indian investors will be able to invest directly in shares of only 8 US companies through NSE IFSC. These companies are Amazon, Tesla, Alphabet (Google), Meta Platform (Facebook), Microsoft, Netflix, Apple and Walmart. It is said that soon 42 more big American companies like PayPal, McDonalds, Johnson & Johnson, Nike Adobe, Berkshire Hathaway, Mastercard, Visa, Chevron, Morgan Stanley and JP Morgan will also get direct investment facility.
When did NSE IFSC start?
NSE IFSC was launched on November 29, 2016. It is in the Gift City of Gujarat. For partial ownership of US shares, investors will need to open a demat account with IFSC. The entire trading, clearing, settlement and holding of US shares will be subject to the regulatory jurisdiction of the IFSC Authority. The IFSC Authority has facilitated this offer under its regulatory sandbox, where funds for purchase will be transferred through RBI’s Liberalized Remittance Scheme (LRS). These deals will be covered under NSE IFSC’s Investor Protection Framework.
How much money is allowed to be sent under LRS
Currently, every Indian can send up to $ 250,000 annually under LRS. But there are certain restrictions on the use of funds sent under the LRS, such as cannot be used for leverage. Therefore, investors who send money abroad through this route cannot use the funds to invest or trade in any derivative products. However, direct investments are allowed in stocks, ETFs, fixed-income products and mutual funds.
Shares will not be issued
Shares will not be issued to investors in American companies. It will be replaced by the NSE IFSC receipt issue with the underlying value of the US stock. To invest, one has to open a demat account in NSE IFSC. The next day from 8:30 pm to 2:30 pm, you can invest directly in US stocks every day (except Saturday-Sunday). It should also be remembered that depository receipts issued against investments in American stocks are classified as foreign assets in India for income tax purposes. Therefore, the rules of short-term capital gain and long-term capital gain will apply to its profits.
First of all, registration with an IFSCA registered trading member is required and KYC will be required.
After this, the bank will have to provide the required documents for LRS.
The money will then have to be transferred from the account to the account of the trading member.
After that, you can start investing directly in American stocks.
– The trading currency will be USD and the minimum ticket size will be $ 0.01.