Quick Take
- Indian investors now have three live routes to access global equity markets: domestic mutual funds, GIFT City funds, and direct international brokerage accounts.
- SEBI’s $7 billion industry cap on overseas mutual funds has been nearly exhausted, forcing funds like Axis, Kotak, and Nippon to pause fresh SIP registrations as of May 2026.
- GIFT City retail funds now bypass the SEBI cap and accept inflows from as low as $5,000 under the RBI’s LRS limit, making global investing accessible to more Indians by mid-2026.
The ET Explainer by Prashant Mahesh lays out the practical mechanics for Indian investors: three routes exist, each with a different cost structure, tax treatment, and minimum ticket size. But the regulatory landscape is tightening fast. SEBI’s industry-wide $7 billion cap on overseas mutual fund investments has been largely consumed, and multiple fund houses have paused or restricted fresh inflows. For investors still looking to participate, the newer GIFT City route and direct international brokerage accounts are now the primary open doors.
StartupFeed Insight
The rush into global equity investing is not a speculative trend. It reflects a structural gap: India’s listed markets have limited exposure to the AI hardware and semiconductor companies that are now the world’s largest wealth creators. NVIDIA, TSMC, and Broadcom have no Indian-listed equivalents. As domestic indices underperform by roughly 7.8% year-to-date in 2026 while global tech surges, Indian investors are making a rational diversification call. The risk is that most who turn to GIFT City funds today are doing so near a market peak in US tech valuations. Watch for SEBI to raise or restructure the $7 billion industry cap by Q1 2027, which would reopen domestic mutual fund routes and ease the current bottleneck. By StartupFeed Desk.
What Is Driving Global Equity Investing Interest in 2026?
Indian equity markets have delivered muted returns in 2026. The domestic benchmark indices are down roughly 7.8% year-to-date, according to market data. Meanwhile, global themes like artificial intelligence (AI) and semiconductors have driven strong gains on US and Taiwanese exchanges.
Indian investors have limited access to these themes through domestic mutual funds. Most India-listed funds tracking global tech themes have hit regulatory caps and are no longer accepting new money. That gap is pushing investors to look directly overseas.
A 20% Tax Collected at Source (TCS) applies on remittances above Rs 7 lakh in a year under the RBI’s Liberalised Remittance Scheme (LRS), according to financial advisors. TCS is not a final tax. It can be adjusted while filing income tax returns. However, it does create an upfront cash-flow cost that smaller investors should plan for.
The 3 Routes: How Indian Investors Can Go Global
There are three practical routes for resident Indian investors to access global equity investing. Each suits a different investor profile.
| Route | How It Works | Minimum | Key Constraint |
|---|---|---|---|
| Domestic International MF | Indian AMC buys global ETFs or stocks inside a fund | Rs 500 SIP | SEBI $7 Bn industry cap; many funds paused |
| GIFT City Fund (IFSC) | Rupees sent via LRS, converted to USD, invested in global markets from GIFT City | ~$5,000 (Rs 4.2 Lakh) | Individual LRS cap $250,000/year; LTCG after 24 months |
| Direct International Brokerage | Open account with an India-tied global broker (e.g. INDmoney, Vested); buy US stocks or ETFs directly via LRS | No formal minimum | Forex conversion cost; brokerage charges; full compliance burden on investor |
Route 1 is effectively closed for most investors right now. By early 2026, only about 28 international mutual fund schemes and 6 overseas ETFs remained open for fresh subscriptions, according to published market data.
GIFT City Route: How Does Global Equity Investing Work Here?
GIFT City (Gujarat International Finance Tec-City) is India’s first International Financial Services Centre (IFSC), regulated by the International Financial Services Centres Authority (IFSCA). It operates in foreign currency, mostly US dollars, and sits outside SEBI’s domestic $7 billion overseas cap.
For a resident Indian, the process involves completing Know Your Customer (KYC) verification, filling an LRS declaration (A2 form) with their bank, and remitting funds in US dollars to the GIFT City fund or brokerage account. The money is converted from rupees to dollars by the bank. Funds then reach the GIFT City account within one to three working days and are invested in global equities.
Key tax facts: GIFT City does not offer a tax-free route for resident Indians. Long-term capital gains (LTCG) apply after a 24-month holding period, unlike the 12-month rule for domestic equity funds. Short-term gains are taxed at the individual’s income tax slab rate. Double Taxation Avoidance Agreements (DTAA) help reduce tax leakage on dividends from foreign companies. Investors must disclose these investments in their annual income tax returns.
Popular products currently available through GIFT City include the DSP Global Equity Fund, Edelweiss Greater China Equity Fund, Parag Parikh IFSC Nasdaq 100 Fund of Fund (FoF), and Parag Parikh IFSC S&P 500 FoF, according to investor resources tracked by StartupFeed.
How Do India’s Returns Compare to Global Markets in 2026?
India’s domestic benchmark indices are down roughly 7.8% year-to-date in 2026. By contrast, Nippon India Taiwan Equity Fund delivered returns of over +171% in FY2026, driven by semiconductor and AI exposure. A Rs 10,000 monthly SIP started in April 2025 would have grown to roughly Rs 2.17 lakh by March 2026, an XIRR of approximately 182.81%, according to fund data.
This outperformance reflects the global AI and semiconductor boom. Indian markets have limited listed exposure to chipmakers like NVIDIA, TSMC, or Broadcom. Funds that tracked these names through overseas ETF routes generated the strongest category returns of the year.
| Market / Fund | 1-Year Return (approx.) | Notes |
|---|---|---|
| India domestic index | -7.8% YTD 2026 | Year-to-date as of May 2026 |
| Nippon India Taiwan Equity | +171% FY2026 | Semiconductor and AI theme; now paused for fresh subscriptions |
| PGIM India Global Equity FoF | +13.53% (1-year as of April 2026) | AUM: Rs 1,694 Cr; accepting limited subscriptions |
| PGIM India Emerging Markets FoF | +20.81% (1-year) | 3-year CAGR: 11.15% |
Not every global fund has performed. PGIM India Emerging Markets FoF delivered only 1.82% over five years, well below category average. Investors chasing last year’s winners in semiconductors and AI may be arriving late to those specific themes.
What Should Indian Investors Watch Next?
The most important near-term trigger for global equity investing access is whether SEBI raises or restructures the $7 billion domestic mutual fund overseas cap. The cap was set in 2008 and has not been revised despite the Indian mutual fund industry growing to over Rs 80 lakh crore in assets under management (AUM) as of February 2026. The $7 billion limit is less than 1% of total industry AUM. If SEBI acts before Q1 2027, the domestic mutual fund route, the simplest and most accessible for retail investors, would reopen at scale. Will that be enough to satisfy the growing appetite for global equity among Indian savers?
Frequently Asked Questions
What is global equity investing for Indian residents?
Global equity investing means putting money into stocks, ETFs, or mutual funds listed on overseas exchanges. Indian residents can do this through domestic international mutual funds, GIFT City funds, or direct international brokerage accounts under the RBI’s LRS limit of $250,000 per year. Each route has different costs, tax rules, and minimum investment requirements.
Why are so many international mutual funds paused in 2026?
SEBI caps the entire Indian mutual fund industry’s overseas investments at $7 billion. By May 2026, that cap was nearly exhausted. Fund houses including Axis, Kotak, Nippon, and Franklin Templeton paused or restricted fresh inflows as a result. Only 28 international schemes and 6 ETFs remained open for new subscriptions by early 2026. Redemptions and existing SIPs continue normally in most paused funds.
Is global equity investing through GIFT City tax-free?
No. GIFT City investments are not tax-free for resident Indians. Long-term capital gains tax applies after a 24-month holding period, compared to 12 months for domestic equity funds. Short-term gains are taxed at the investor’s income slab. The Double Taxation Avoidance Agreement (DTAA) can reduce withholding tax on foreign dividends, but full income tax return disclosure is mandatory.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Mutual fund investments are subject to market risk. Past performance is not indicative of future returns. Global equity investing involves additional risks including currency fluctuation and regulatory changes in foreign jurisdictions. Please consult a SEBI-registered investment advisor before making any investment decisions.
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