GIFT City could be changing the way Indians invest overseas.

For years, an Indian resident wanting to invest directly in US stocks, foreign ETFs or other international securities generally had to navigate the Liberalised Remittance Scheme (LRS), foreign-exchange conversion, overseas brokers and international tax reporting.

Now, India is building another route.

In May 2025, SEBI permitted its registered stock brokers to undertake securities-market activities in GIFT-IFSC through a Separate Business Unit (SBU). The activities of the SBU are to operate under the regulatory framework applicable in GIFT-IFSC.

Then, in August 2025, IFSCA introduced a revamped Global Access framework, creating a more clearly defined regulatory structure for intermediaries providing Indian and other eligible investors access to global markets.

This creates an intriguing possibility:

Could an Indian investor eventually access global markets through the same domestic broker they already use for Indian equities?

The answer is increasingly yes.

But there is a much more important question:

Is GIFT-IFSC actually better than simply investing overseas through the traditional LRS route?

The answer is: it depends.

GIFT-IFSC could offer greater convenience and a more India-oriented experience. But it does not eliminate LRS restrictions, currency risk or foreign-investment taxation. And investors need to understand that the investor-protection framework for the global-access activity is not identical to the protection they receive when trading on Indian exchanges.

Let’s examine the difference.

🏙️ What Exactly Changed in 2025?

The first major development came from SEBI.

On May 2, 2025, SEBI issued Circular No. SEBI/HO/MIRSD/MIRSD-PoD/P/CIR/2025/61, permitting SEBI-registered stock brokers to undertake securities-market-related activities in GIFT-IFSC through a Separate Business Unit.

Previously, a broker seeking to establish an IFSC presence could use a subsidiary or joint-venture structure subject to the applicable requirements.

The SBU framework provides another route.

The important point is that the SBU is not simply an extension of the broker’s ordinary Indian securities business.

The activities need to be segregated and ring-fenced, with the relevant IFSC activities falling under the applicable regulatory framework.

IFSCA subsequently incorporated the SEBI SBU development into its Global Access framework.

This effectively creates a bridge:

Indian stock broker

⬇️

GIFT-IFSC SBU

⬇️

IFSCA-regulated global-access ecosystem

⬇️

Foreign markets

That is potentially a major structural change.

🌎 What Is GIFT-IFSC?

GIFT-IFSC is India’s International Financial Services Centre located in GIFT City, Gujarat.

IFSCA’s stated objective is to develop the IFSC as a gateway connecting India with global financial markets. Its Global Access framework specifically describes the IFSC as a platform for facilitating dealings in securities and permitted financial products on global exchanges.

The idea is straightforward:

Instead of India’s international financial activity being conducted primarily through financial centres outside India, some of that activity can increasingly be brought into GIFT City.

That is why GIFT-IFSC matters beyond just stock trading.

It is part of India’s broader attempt to build a global financial centre within the country.

💡 What Is a Separate Business Unit?

A Separate Business Unit is essentially a separately ring-fenced business operation within the existing stock-broking entity.

The important word is separate.

The broker cannot simply mix its domestic Indian securities operations and its IFSC operations into one undifferentiated business.

SEBI’s SBU framework requires appropriate segregation and ring-fencing of the activities.

This matters to investors because the familiar name of an Indian broker does not necessarily mean that every service offered under that name has the same regulatory framework.

That distinction will become increasingly important as brokers market international investing services.

🇺🇸 How Could an Indian Investor Buy Global Stocks?

There are now two broad models worth comparing.

Route 1: Traditional LRS Route

A simplified structure is:

Indian investor

⬇️

Indian bank / authorised dealer

⬇️

Foreign currency remittance under LRS

⬇️

Overseas broker

⬇️

Foreign stock exchange

This is the traditional international-investment route.

Route 2: GIFT-IFSC Global Access

The structure can instead look like:

Indian investor

⬇️

Indian broker / IFSC SBU or other IFSC intermediary

⬇️

GIFT-IFSC Global Access Provider

⬇️

Foreign broker

⬇️

Global exchange

The backend remains international.

The difference is that the intermediary and regulatory infrastructure connecting the investor to the global market can increasingly sit inside India’s IFSC ecosystem.

IFSCA’s 2025 framework specifically permits Global Access Providers to provide access to financial products listed on foreign exchanges, subject to the IFSC framework and FEMA requirements.

⚖️ GIFT-IFSC vs Traditional Overseas Investing

The last row is particularly important.

GIFT-IFSC is not a magic tax-free gateway to the US stock market.

💰 Does GIFT-IFSC Bypass the LRS Limit?

No.

This is probably the biggest misconception investors could have.

The RBI’s LRS permits resident individuals to remit up to US$250,000 per financial year for permitted transactions. Investments abroad are among the permitted capital-account transactions, subject to the applicable rules.

More importantly, IFSCA’s Global Access framework explicitly says that when global-market access is provided to an Indian resident, the products available must comply with FEMA requirements.

Its guidance goes further:

Access for a resident Indian individual must be restricted to investments permitted under the LRS.

So:

GIFT City ≠ LRS bypass

and

GIFT-IFSC ≠ unlimited foreign investment.

That distinction should be firmly understood before investing.

🧾 What About Taxation?

This is where the comparison becomes more complicated.

There is a tendency to assume:

IFSC = tax advantage = investor tax advantage

That equation is incorrect.

GIFT-IFSC has several tax incentives for eligible businesses and financial activities.

But a tax benefit available to an IFSC entity does not automatically become a tax exemption for the retail investor using that entity.

The retail investor needs to examine the taxation of the underlying investment.

📈 Foreign Shares Are Still Foreign Assets

Suppose an Indian resident buys Apple, Microsoft or another US-listed company through a GIFT-IFSC intermediary.

The fact that the order was placed through an Indian-facing platform does not turn the foreign shares into Indian securities.

The investor still owns an interest in a foreign asset.

That has implications for:

• capital-gains taxation

• dividend taxation

• foreign tax credits

• foreign-asset disclosure

• currency conversion

• applicable FEMA/LRS requirements

The route through which you buy the asset does not fundamentally change its underlying geography.

⏳ Be Careful With the Familiar 12-Month Rule

This is an area where Indian investors can easily make a mistake.

For Indian listed equity, investors are familiar with the 12-month long-term holding period.

But the Income Tax Department’s guidance specifically distinguishes Indian listed securities from other capital assets. It states that the general holding period is 36 months, with 12 months applying to specified assets including shares listed on a recognised stock exchange in India.

Therefore, investors should not automatically assume that a US-listed share gets exactly the same capital-gains treatment as an Indian listed share.

The applicable classification and tax rules need to be checked for the relevant security and tax year.

This is one reason why international investing can be more complicated than buying an Indian stock.

💵 Dividends Can Have Two Tax Layers

Consider a US dividend-paying stock.

The foreign country may impose withholding tax before the dividend reaches the investor.

The investor may then have an Indian tax liability because the investor is resident in India.

Foreign-tax-credit rules can potentially prevent the same income from being taxed twice, subject to the applicable conditions and documentation.

The Income Tax framework provides for foreign tax credit for qualifying foreign taxes paid by a resident, subject to the applicable rules.

So the real calculation can involve:

Foreign withholding tax

Indian tax

−

Eligible foreign tax credit

The exact result depends on the security, jurisdiction, treaty provisions, tax status and documentation.

💱 Currency Risk Does Not Disappear

This is another misconception.

Suppose an investor buys a US stock.

There are actually two major moving parts:

Stock return

USD/INR movement

If the US stock rises 10% but the dollar weakens against the rupee, the investor’s rupee return will be lower.

If the dollar strengthens, the opposite can happen.

Therefore:

International diversification introduces currency exposure along with market exposure.

GIFT-IFSC doesn’t remove this.

🛡️ The Most Important Issue: Investor Protection

This is where I would urge retail investors to pay particularly close attention.

The biggest mistake would be to assume:

“I am using an Indian broker, therefore I have exactly the same investor protection as when I buy an NSE-listed stock.”

That isn’t necessarily true.

IFSCA’s Global Access framework explicitly requires providers to disclose that certain investor-protection, dispute-resolution and investor-grievance mechanisms of the IFSC recognised stock exchanges are not available for clients using global access.

That is a critical distinction.

The global-access transaction can involve:

Indian broker / introducing broker

→ IFSC Global Access Provider

→ foreign broker

→ foreign exchange

There are multiple regulatory jurisdictions and entities in the chain.

🔍 Who Actually Holds Your Securities?

This is one of the first questions an investor should ask.

Don’t simply ask:

“Which broker am I using?”

Ask:

Who is my contracting entity?

Is it:

• the Indian broker?

• its IFSC SBU?

• an IFSC subsidiary?

• a Global Access Provider?

• a foreign broker?

Who is the custodian?

Where are my securities held?

Which regulator has jurisdiction?

What happens if one of the intermediaries fails?

These aren’t academic questions.

IFSCA’s framework specifically requires disclosures regarding roles and responsibilities, custody arrangements, account structure, investor-protection schemes or insurance coverage, fees and applicable taxation.

That is exactly the information investors should read before opening an account.

💰 What Happens to Your Money?

IFSCA has also imposed specific requirements around client funds.

Global Access Providers must route client funds participating in global access through a bank account in the IFSC, and client funds must be segregated from proprietary trading funds.

This is a positive feature.

But investors should distinguish between:

Segregation of client funds

and

Guarantee against investment losses or intermediary failure.

They are not the same thing.

🌎 There Is Still a Foreign Broker in the Chain

This is another subtle but important point.

An IFSC Global Access Provider can have an arrangement with a regulated foreign broker to provide access to global markets. IFSCA’s framework requires the foreign broker to be regulated or registered in its foreign jurisdiction and to comply with the applicable requirements there.

Therefore, GIFT-IFSC does not necessarily mean:

India → directly → US exchange

Instead, the architecture can still involve:

India → IFSC → foreign broker → global exchange

The advantage is that the front-end regulatory and intermediary relationship can increasingly be anchored in India’s IFSC ecosystem.

📱 Why Domestic Brokers Could Have a Major Advantage

This is where I think the SBU framework becomes genuinely interesting.

Imagine you already use an Indian broker.

You have:

• Indian bank account

• Indian trading account

• existing KYC

• familiar mobile application

• existing customer support relationship

Now imagine the same ecosystem offering:

Indian equities + global equities

through an IFSC-based international-investment service.

That could dramatically reduce the psychological and operational barrier to global investing.

The investor may no longer feel like they are:

“Opening an account in another country.”

Instead, it could feel like:

“Adding international investing to my existing investment platform.”

That is a powerful proposition.

🧮 But Convenience Is Not the Same as Low Cost

Investors should compare the total cost, not just the brokerage headline.

Calculate:

Brokerage

Currency conversion spread

Remittance costs

Platform fees

Custody fees

Foreign-market charges

Taxes

Withdrawal / transfer charges

The IFSCA framework specifically requires disclosure of applicable fee structures and charges such as entry, exit, withdrawal, transfer and account-closure charges.

A “zero brokerage” headline tells you very little about the actual economics.

🏦 Traditional LRS Route Still Has Advantages

GIFT-IFSC should not automatically be considered superior.

An established international broker may offer:

• broader market access

• more exchanges

• more order types

• sophisticated research

• wider ETF selection

• advanced portfolio tools

• more mature international infrastructure

For an investor who already understands international markets, these features can matter more than convenience.

🌱 Where GIFT-IFSC Could Win

The IFSC model could be particularly compelling for the ordinary long-term Indian investor.

Imagine someone who wants:

• 5–10 high-quality global companies

• a few diversified international ETFs

• a modest allocation to global equities

• long-term diversification

• minimal operational complexity

That investor doesn’t necessarily need the world’s most sophisticated international trading platform.

They need:

Simple + regulated + transparent + reasonably priced access.

That is exactly where GIFT-IFSC could potentially shine.

📊 Who Should Consider Which Route?

These ratings are an investor-oriented assessment, not regulatory scores.

The actual experience will depend heavily on the broker and Global Access Provider.

🚨 Five Things Investors Must Check Before Opening a GIFT-IFSC Account

1️⃣ Identify the actual legal entity

Don’t stop at the brand name.

Find out exactly which entity is providing the service.

2️⃣ Identify the regulator

Is the particular activity regulated by:

• SEBI?

• IFSCA?

• a foreign regulator?

The answer can differ depending on the activity.

3️⃣ Understand the custody chain

Find out:

• where your securities are held

• who the custodian is

• how assets are segregated

• what happens if the broker fails

4️⃣ Calculate the real cost

Don’t compare only brokerage.

Compare the complete transaction cost including FX.

5️⃣ Understand taxation before investing

Check:

• capital gains

• dividends

• foreign withholding tax

• foreign tax credit

• foreign-asset reporting

• LRS-related tax implications

For large investments, professional tax advice may be worthwhile.

🔴 What GIFT-IFSC Does NOT Mean

Let’s eliminate the biggest misconceptions.

❌ It does not eliminate LRS

Indian residents remain subject to FEMA/LRS restrictions for permitted investments.