The International Financial Services Centre (IFSC) platform of the National Stock Exchange (NSE) in Gujarat’s GIFT City will start trading in eight US-based company stocks from March 3.
The NSE IFSC has been given the green light to trade receipts for 50 US-based stocks. The exchange will initially trade Apple, Amazon Inc, Alphabet Inc, Microsoft, Tesla Inc, Meta, Netflix, and Walmart, and will gradually list the 50 largest US corporations. Some of the other stocks would like to list on the NSE IFSC platform as well, and the trading timeline will be announced soon. Among these companies are Berkshire Hathaway, Intel, JP Morgan Chase, Morgan Stanley, Mastercard, Nike, Paypal, Pepsico, and Pfizer.
This does not suggest that American stocks will be listed in India. Market makers will rather purchase equities in the US and issue unsponsored depositary receipts against it, according to the NSE circular. The IFSC Authority, GIFT City, shall be the exclusive regulator for this process. Retail investors can trade these equities on the IFSC platform under the Reserve Bank of India’s (RBI) liberalized remittance scheme (LRS) regulations, which are now $2,50,000 each fiscal year.
It is a wholly-owned subsidiary of the National Stock Exchange of India (NSE) and has obtained market regulator approval to set up an international exchange in GIFT – International Financial Service Centre (IFSC) Gandhinagar. Trading in equity shares of firms instituted outside of India, debt securities of qualified issuers, depository receipts, interest rate, currency, index, and non-agriculture commodities derivatives is permissible on the exchange. It is the exchange that will provide derivative trading.
In order to file income tax returns, domestic investors must enroll a Demat account at the IFSC, and stock receipts will be classified as foreign assets. This entails a slab rate of 20 percent with indexation for profit generated within two years of purchase and a 20 percent rate with indexation for gains made thereafter two years. The India International Exchange (India-INX), which is controlled by the BSE, also trades international stocks to Indian investors via IFSC. For international brokers, BSE operates as an introducing broker.
One can also open a brokerage account in another country, either through a domestic brokerage such as Winvesta or Vested Finance or via a foreign brokerage. Many Indian brokers also allow their customers to invest in foreign currencies. Vested Finance has worked with Angel Broking, 5paisa, and Axis Direct to deliver services to their customers.