While the Indian stock market has grown rapidly, it still represents less than 4% of the global market capitalization. Limiting your investments to this small fraction means you may missing out on the vast majority of the world’s wealth creation.
Investing internationally provides access to innovative companies such as Tesla, Alphabet and Netflix, diversifying your portfolio across geographies, reducing overall volatility and mitigating country-specific risks.
At the 2025 Mint Money Festival, Viram Shah, co-founder and chief executive officer (CEO) of Vested Finance, which helps Indians invest abroad, and Nikhil Behl, co-founder and CEO-Stocks at IndMoney, a personal finance platform, discussed how investors can diversify their portfolios into foreign equities to ride out domestic shocks.
“Investors can get access to innovative companies not just in the US but in other countries as well. Many of these companies also trade at attractive valuations abroad, which may not be the case in domestic markets,” said Shah.
Behl said investing abroad has picked up in the past four years. “The new investors coming in are young, and they are tech-savvy and know what these companies do. The demand is surging and we’ve sold more US stocks in the first six months of this year than we did in the entire last year,” he said.
US+ strategy
The Indian investor investing abroad is maturing and is looking beyond tech companies, said Shah of Vested. He added that sectors like healthcare are gaining traction among Indians investing in the US. Investors are also US-plus-one strategy, exploring more markets.
“It’s no longer just Tesla, Alphabet, or FAANG that people are looking at. People are asking how they can get access to the China and Brazil markets as well. “Opportunistic investors who were looking at small and mid-cap companies in India have also started looking at small and mid-sized companies in the US as they hunt for potential multi-baggers,” said Shah.
Behl said that once investors get access to the US market, they can invest worldwide using exchange-traded funds (ETFs) that trade on US exchanges. “In the US, there are many ETFs that will give you exposure to any country in the world. They are also very cost-efficient.”
Taxation
Behl said that after this year’s Union budget, capital gains from investing in international shares are taxed at 12.5%, the same as that of India. The only nuance is that 12.5% LTCG (long term capital gains) for Indian stocks kicks in after a one-year holding period, whereas for international securities, it is applicable after two years. For the short term, gains are taxed at the slab rate for international securities, whereas it is 20% for listed Indian shares.
Responding to an audience query on dividend taxation in US stocks, Behl said the dividends come to the brokerage account directly and not the bank account. An investor receiving $1 as dividend can simply reinvest that amount, and do not have to think about remitting the money back to India and paying tax on it. For context, in India, the dividend gets credited directly to the bank account.
Behl also pointed to the India-US Double Taxation Avoidance Agreement, often missed by many investors. “When you get $100 as dividend on your US stocks, the US Internal Revenue Service will take $25 as withholding tax. However, people can claim a full refund of the $25 when filing taxes in India. “It’s a little-known hack that many people don’t know and miss out on,” he said.
Challenges with foreign brokers
Shah made a case for investors choosing local platforms, since foreign brokers typically don’t design their platforms keeping Indian regulations in mind. “The challenge is that there are a lot of things you can’t do, and the foreign broker might not know about the Indian rules.”
“For example, you cannot do derivatives trading abroad. If you do it abroad using a foreign broker, you can end up taking a risk on yourself. The foreign broker might not tailor their platform according to Indian regulations,” Shah said.