Can a non-India citizen, expats, international or a company not registered in India invest or conduct trading in the Indian stock market?
The answer is ‘YES’.
Indian stock market has been one of the few markets that have adopted a semi closed policy towards foreign investment. Foreign nationals were allowed earlier also to invest in the Indian stock markets but through the Foreign Institutional Investor route, which had its own implications, as it had to be registered with SEBI (regulator of the markets in India), the investment size had to be substantial, tax laws etc.
Wish to open a ‘INDIA investment account’?
The process was cumbersome and did not make sense for small investors to put in their money which made lot of investors that were interested in making investments in India, stay away from the Indian financial markets.
With the recent slump in foreign investment and the slowdown of growth in the Indian economy forced the Indian government to look out for more options to bring in foreign investments. A new class of investors was created to allow foreign nationals, foreign citizens, foreign companies, foreign trusts and foreign institutions to invest in the Indian stock markets as well as Indian mutual funds; called Qualified Foreign Investors.
A qualified foreign investor is defined to be, “any person that:
is not a resident of India; and
is not registered as a FII (foreign institutional investor) or as a sub account of a FII; and
is a resident of a country that
- is a member of the Financial Action Task Force (FATF); or
- is member of a group that is member of the FATF like the EC or GCC; or
- is a signatory to IOSCO’s MMOU (Appendix A Signatories); or
- is a signatory of a bilateral MOU with SEBI”.
A Person as defined by Section 2 (31) of the Income Tax Act, 1961 includes:
- an individual,
- a hindu undivided family ,
- a firm,
- an association of persons or a body of individuals, whether incorporated or not,
- a local authority
- every artificial judicial person, not falling with any of the preceding sub-clauses,
- any agency, office or branch owned or controlled by such person.
With the invention of this new class of investors Foreign national with no prior connection with India, companies, organizations, institutions registered in any country that is eligible under this scheme, are qualified to invest in
- Indian Equity and debt mutual funds
- Indian stock markets
- Indian corporate bonds
For more information contact: email@example.com
Below is the list of countries, whose residents are allowed to invest under the QFI route:
Republic of Korea
United Kingdom (U.K)
USA (United States of America)