National Stock Exchange (NSE) has been facilitating this through its international subsidiary, NSE IFSC (located in GIFT City, Gujarat), since March 2022.
While the service is often marketed as “direct trading,” the technical structure is unique: you aren’t buying actual shares on the NYSE or NASDAQ. Instead, you are buying Unsponsored Depository Receipts (DRs) that represent a fraction of those shares.
How the NSE IFSC Route Works
The exchange uses a “Depository Receipt” model to make expensive US stocks (like Berkshire Hathaway or Amazon) affordable for the average Indian retail investor.
- Fractional Ownership: One actual share is split into multiple receipts. For example, 1 Apple share might equal 25 NSE IFSC Receipts. This allows you to invest as little as $5–$10 in a company.
- Custodian Model: A custodian (like HDFC Bank in GIFT City) buys the actual shares in the US and holds them. They then issue receipts against those shares to be traded on the NSE IFSC platform.
- Currency: All trading and settlement happen in US Dollars ($).
Steps to Start Trading
If you want to use this route today, the process differs from your regular domestic brokerage:
- Open an IFSC Account: You cannot use your existing Zerodha or Groww domestic demat account. You must open a specific Demat and Trading account with an IFSC-registered broker.
- LRS Documentation: You must submit a “Liberalised Remittance Scheme” (LRS) declaration, as your investment is technically considered an “outbound” transfer of funds.
- Fund Transfer: You transfer INR from your Indian bank account to the broker’s account in GIFT City. The bank/broker converts it to USD (typically charging a 0.5%–2% markup).
- Trade: You can buy or sell during US market hours (typically 8:00 PM to 2:30 AM IST).
Key Comparison: NSE IFSC vs. Direct US Apps
| Feature | NSE IFSC (GIFT City) | Direct Apps (e.g., Vested, Indmoney) |
| Asset Type | Depository Receipts (DRs) | Actual US Shares |
| Regulation | IFSCA (India) | SEC / FINRA (USA) |
| Available Stocks | Limited (around 50 top stocks) | 5,000+ Stocks & ETFs |
| Investor Protection | Protected under Indian laws | Protected by US SIPC ($500k insurance) |
| Taxation | Capital gains taxed in India | Capital gains taxed in India + US dividend tax |
Important Limitations to Note
- Liquidity Risk: Because only Indians and NRIs trade on NSE IFSC, the trading volume is much lower than the actual US stock market. This can sometimes lead to a “price gap” where the receipt doesn’t perfectly match the US share price.
- LRS Limit: You are still bound by the RBI’s annual limit of $250,000 for all foreign spends and investments.
- Dividend Service Charge: While you receive dividends, the custodian (bank) often takes a small service fee (roughly 10% of the dividend amount) for processing the payment from the US to India.
