Imagine owning a slice of Apple, Google, or NVIDIA — straight from India, without opening a US brokerage account. Until recently, global investing meant jumping through hoops — tying up with foreign brokers, navigating complicated paperwork, or relying on international mutual funds (which now face regulatory restrictions). But there’s a new, simpler gateway — GIFT City, India’s answer to international finance hubs like Dubai or Singapore.
Through GIFT City’s NSE International Exchange (NSE IX), Indian investors can now buy US stocks directly, without leaving home. And not just full shares — fractional investing is also possible, making stocks like Amazon or Tesla accessible even with a few hundred rupees.
Let’s break down how this works, why it’s catching on, and how you can get started.
What Makes GIFT City a Game-Changer?
Located in Gujarat, GIFT City (short for Gujarat International Finance Tec-City) is designed as a tax-friendly international financial zone. It operates under special rules, making it distinct from the rest of India for foreign exchange and investment regulations.
All activity in GIFT City — whether it’s banking, insurance, or stock trading — is regulated by a unified authority: the IFSCA (International Financial Services Centres Authority).
This unique setup allows Indian investors to access global markets more directly and affordably than ever before.
What Exactly Is NSE IFSC — And How Is It Related to NSE IX?
Let’s clear the confusion.
NSE IFSC Ltd is the subsidiary of the National Stock Exchange (NSE) that operates from GIFT City. Think of it as NSE’s international arm created to facilitate global trading in this special financial zone.
Now, within this framework, NSE International Exchange (NSE IX) is the trading platform run by NSE IFSC. That’s where the action happens — it’s the exchange where UDRs of US stocks are listed and traded.
In short:
- NSE IFSC is the entity
- NSE IX is the exchange/platform you interact with to buy and sell UDRs
Together, they bring the US stock market closer to Indian investors — no US broker needed.
Two Ways to Invest in US Stocks via GIFT City
Now, let’s talk options. There are currently two primary ways to access US stocks from GIFT City:
- India INX Global Access (via BSE):
This connects you to 80+ global stock exchanges through tie-ups with international brokers. Think of it like a middleman model — still effective but slightly more complex.
- NSE International Exchange (NSE IX):
This is where things get exciting. NSE IX offers Unsponsored Depository Receipts (UDRs) — a simpler, more direct way to invest in top US companies without needing a US broker. That’s our focus for today.
So, What Are UDRs and How Do They Work?
UDRs, or Unsponsored Depository Receipts, are like digital stand-ins for real US stocks. They represent a fraction of a share of a listed company like Apple or Tesla, and are traded on NSE IX — right from GIFT City.
Here’s how it works:
- Custody: HDFC Bank (based in GIFT City) holds the real shares on your behalf in India, while Deutsche Bank holds them in the US depository system (DTCC).
- Unsponsored: These receipts aren’t issued by the companies themselves (hence, ‘unsponsored’), but by the exchange and custodians.
- Fractional Access: You can buy a portion of a share. For instance, if Apple is trading at $125 and the UDR represents 1/25th of a share, you can get started with just $5 (about Rs 400)!
Trading hours? UDRs are live on NSE IX from 7:00 PM to 1:30 AM IST, syncing with US market hours.
Who Can Invest in UDRs?
Whether you’re an Indian Resident, an NRI, or even a foreign national (except those in the US and Canada), you’re eligible. Here’s how it breaks down:
- Indian Residents:
You can invest under the Liberalised Remittance Scheme (LRS), up to $250,000 per year.
- NRIs:
No investment cap. You can use your foreign bank account and invest freely — a huge plus for those based in countries where direct US investing is difficult.
How Much Do You Need to Start?
There’s no fixed minimum — your entry point depends on the share price and its UDR ratio.
🔹 Example: If Amazon trades at $100 and the UDR is 1/25th, you can start with just $4–5. That’s cheaper than many domestic blue-chip stocks!
How to Open an Account and Start Investing
Setting up is surprisingly easy, though the process differs for Indian Residents and NRIs.
For Indian Residents:
- Open a demat account with a GIFT City-approved broker.
- Upload documents: PAN, Aadhaar/passport, income proof.
- Video KYC + Aadhaar e-signature for verification.
- Transfer funds under LRS.
- Note: If you remit over Rs 10 lakh/year, 20% TCS (Tax Collected at Source) applies.
For NRIs:
- Partial online + offline setup.
- Submit notarised documents: PAN, passport, foreign ID (like Emirates ID), proof of foreign address, and photo.
- No Indian bank account needed.
- No TCS applies.
Can UDRs Be Converted into Actual US Stocks?
Yes — and that’s a big advantage.
If you hold enough UDRs to form full shares (say, 25 UDRs for 1 Apple share), you can cancel them and move the real shares into your US brokerage account.
You’ll need to submit a form to HDFC Bank (GIFT City) or CDSL IFSC, and pay a small $0.05 per UDR as cancellation fee.
Tax Rules: UDRs vs Direct US Stocks
Let’s simplify this:
Capital Gains:
- No US capital gains tax for non-residents.
- No capital gains tax in GIFT City either.
- But Indian residents must pay:
- 12.5% if held over 2 years (long-term gains)
- Tax slab rate if held for less (short-term gains)
Dividends:
- 25% tax withheld in the US
- 10% service fee by HDFC IFSC on the post-tax amount
- Remaining amount is taxed again in India as per your slab
✅ Use the India-US DTAA to claim credit and avoid double taxation
Direct US Stocks vs GIFT City UDRs
Let’s lay it out:
Factor | Direct via US Broker | GIFT City UDRs |
Stocks Available | Entire US market + ETFs | 50 top US stocks (expanding soon) |
Ownership | Full stock ownership | Fractional receipts backed by stocks |
Investment Limit | $250K for residents | Same |
Taxes | Based on local laws | Same + small dividend fee |
Settlement Time | T+1 (fast) | T+3 (slower) |
Liquidity | High | Moderate; depends on stock |
Costs | Currency + broker fees | Similar; some offer zero brokerage |
Regulation | Under US rules | Regulated by IFSCA (India) |
Investor Protection | SIPC insurance ($500K) | No insurance, but held in your demat |
Holding Structure | Broker’s pool account | Individual demat holding |
Why UDRs Are Worth Considering
Here’s why UDRs stand out:
- Safer Holding Structure: UDRs are stored in your demat account, not in your broker’s pool. Even if your broker shuts shop, your investments are intact.
- No Need for a US Broker: Skip the KYC hassles, tax paperwork, and broker tie-ups abroad.
- Lower Costs: Some brokers offer zero brokerage on UDRs.
- Perfect for NRIs: Especially for those in countries like Kuwait, Qatar, or Malaysia, where direct US investing isn’t always available.
- Unified Platform: For NRIs managing Indian and US portfolios, GIFT City acts as a one-stop shop.
What’s the Catch?
A few things to watch out for:
- Limited Stock Universe: Only about 50 stocks available now. NSE IX plans to expand to 100, and possibly ETFs too.
- Liquidity Can Vary: Some UDRs may not trade actively, leading to wider price gaps or delays in selling.
- No SIPC Insurance: Unlike US brokers, UDRs don’t come with insurance coverage. But again, your demat holding gives an added layer of protection.
Bottomline
Investing in global giants like Apple, Amazon, or Google no longer needs to be a far-fetched dream or a bureaucratic nightmare. Thanks to GIFT City and NSE IX UDRs, you can now access the US market on your terms — safely, affordably, and directly from India.
Whether you’re a first-time investor curious about diversifying globally or an NRI looking for a consolidated investment route, UDRs offer a smart, accessible alternative.
It’s not just about investing abroad anymore — it’s about doing it better, smarter, and more securely.
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