How to invest in the S&P 500 from India: A complete guide

Want to invest in the S&P 500 from India? This guide covers everything you need to know, including investment methods, tax implications, risks, and strategies for maximizing returns.

Introduction

With increasing globalization, more Indian investors are looking beyond domestic markets and exploring international investment opportunities. One of the most preferred choices for global investing is the S&P 500 index, which consists of 500 of the largest publicly traded companies in the United States.

The S&P 500 includes some of the world’s most successful companies, such as Apple, Microsoft, Amazon, Tesla, and Google, which are known for their innovation, financial stability, and strong market presence. Investing in this index allows Indian investors to diversify their portfolios and gain exposure to global economic growth.

However, before investing, it is essential to understand the different methods available, the associated risks, the tax implications, and strategies to maximize returns. This guide provides a comprehensive roadmap on how to invest in the S&P 500 from India, helping investors make informed decisions.

Understanding the S&P 500

The S&P 500 index is a widely followed stock market index that represents the performance of 500 large-cap companies listed on US stock exchanges. Introduced in 1957 by Standard & Poor’s (now S&P Global), the index is used as a benchmark to measure the health of the US stock market and economy.

The index covers companies from multiple sectors, including technology, healthcare, finance, consumer goods, and energy, making it a well-diversified investment choice. Unlike investing in a single stock, where the risk is concentrated, investing in the S&P 500 spreads risk across multiple industries and companies.

Historically, the S&P 500 has delivered an average annual return of around 10%, making it one of the most consistent wealth-building tools. For example, an investor who invested $10,000 in the S&P 500 in 1990 would have seen their investment grow to over $150,000 by 2024, assuming dividends were reinvested. This highlights the power of long-term investing and compounding.

Benefits of investing in the S&P 500 for Indian investors

Diversification and risk reduction

Investing in the S&P 500 provides exposure to multiple industries, reducing the risk associated with investing in a single sector. While the Indian stock market is heavily weighted towards IT and banking stocks, the S&P 500 includes global leaders in artificial intelligence, biotechnology, clean energy, and semiconductor industries, offering investors a more balanced portfolio.

Global market exposure

Companies listed in the S&P 500 generate significant revenues from international markets. For example, Apple and Microsoft derive over 50% of their revenue from outside the US, meaning investors indirectly gain exposure to global economic trends.

Strong historical performance

The S&P 500 has consistently outperformed many other asset classes, including gold, bonds, and real estate, over long periods. Even after financial crises, such as the 2008 recession and the 2020 COVID-19 crash, the index rebounded strongly, rewarding long-term investors.

Currency diversification and rupee hedging

Investing in US dollars helps Indian investors hedge against rupee depreciation. Over the past decade, the Indian rupee has depreciated from 55 per USD in 2013 to over 83 per USD in 2024, meaning that investments in US assets have gained additional value due to currency appreciation.

Methods to invest in the S&P 500 from India

1. Mutual funds

Several Indian asset management companies offer mutual funds that invest in the S&P 500. These are often structured as fund of funds (FoFs) or feeder funds, which invest in US-based ETFs or index funds.

A popular example is the Motilal Oswal S&P 500 Index Fund, which allows Indian investors to participate in the US market with a minimum investment of Rs 500.

2. Exchange-traded funds (ETFs)

Investors can buy S&P 500 ETFs through brokers that provide international market access. Unlike mutual funds, ETFs are traded on stock exchanges, allowing for real-time buying and selling.

3. Direct stock purchase

Indian investors can buy individual stocks from the S&P 500 through international brokers. While this method allows for stock-specific investment, it requires more research and active management.

4. International brokerage accounts

Several platforms, such as Interactive Brokers and Vested, allow Indian investors to directly invest in US stocks and ETFs. These platforms offer more flexibility but require compliance with Liberalised Remittance Scheme (LRS) regulations.

Updated tax implications for Indian investors

1. Long-term capital gains (LTCG) tax

As of 2025, long-term capital gains (LTCG) from US stocks held for more than 24 months are taxed at 12.5% in India, down from the previous 20%. This makes investing in US stocks more tax-efficient for Indian investors.

2. Short-term capital gains (STCG) tax

• Stocks held for less than 24 months are taxed at the investor’s income tax slab rate.

3. Dividend tax

• Dividends from US stocks are taxed at 25% in the US and must also be reported as income in India.

4. Double Tax Avoidance Agreement (DTAA)

• India and the US have a Double Tax Avoidance Agreement (DTAA), which helps investors avoid paying taxes on the same income in both countries.

5. Liberalised Remittance Scheme (LRS)

• Indian residents can remit up to $250,000 per financial year for overseas investments under the Liberalised Remittance Scheme (LRS).

Performance forecast and market outlook

1. Growth projection

• Goldman Sachs Research projects that the S&P 500 will rise to 6,500 by the end of 2025, representing a 9% price gain and a 10% total return, including dividends.

2. Potential risks

• The Economic Survey 2025 has warned that US stock market valuations are elevated, and a market correction in 2025 is possible, which could impact global markets, including India.

3. Analyst expectations

• A survey of 27 Wall Street analysts places the year-end target at 6,600, implying a 10% annual gain from 2024 levels.

4. Current market performance

• As of March 2025, both Indian and US markets have faced setbacks, with the Nasdaq-100 down 3.1% year-to-date, showing potential volatility.

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Final thoughts

Investing in the S&P 500 from India is an excellent strategy for diversification, global market exposure, and wealth creation. With reduced LTCG tax rates, multiple investment options, and positive long-term projections, Indian investors have compelling reasons to consider US stock investments.

However, investors must remain aware of currency fluctuations, market corrections, and tax implications. By staying committed to a long-term investment strategy, diversifying beyond the top-performing stocks, and making informed decisions, investors can maximize their returns while mitigating risks.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Past performance is not indicative of future results, and investments in international markets carry inherent risks, including currency fluctuations and tax implications. Please consult a professional financial advisor before making investment decisions.

Contributed by Denila Lobo

Denila is a content writer at Winvesta. She crafts clear, concise content on international payments, helping freelancers and businesses easily navigate global financial solutions.