India’s leading brokerage platforms, including Zerodha and Groww, are using GIFT City to expand into global investing, opening up a new avenue for growth as earnings from domestic brokerage operations begin to moderate.
The move comes after a sharp rise in retail participation in Indian markets. The number of demat accounts has climbed from around 40 million in 2020 to more than 190 million. Yet only a small fraction of investors currently invest overseas.
That gap presents an opportunity for brokers looking to deepen customer engagement and add new revenue streams.
New revenue source
Global investing allows brokerages to offer access to international stocks through GIFT City.
The business model provides multiple income opportunities.
Brokerages can earn through:
- Currency conversion spreads, typically around 0.5% to 1.5%.
- Charges on international trades.
- Higher overall investment activity if more users allocate money abroad.
Even limited adoption could increase the amount of business generated from existing customers.
Investors are looking beyond India
Investor preferences are changing.
Earlier, many investors focused mainly on returns. Increasingly, portfolio diversification is becoming part of the strategy.
For brokerage firms, offering overseas investments also helps retain customers. Without such products, users could shift to competing platforms that provide access to foreign markets.
Risks remain
Investor behaviour could pose a bigger challenge than regulations.
Many first-time overseas investors may gravitate toward brands they already know. Familiarity with global companies can result in concentrated portfolios despite investing across borders.
Examples include:
- Apple among iPhone users.
- Tesla among electric vehicle enthusiasts.
- Companies such as SpaceX, following its high-profile IPO in 2026.
Such preferences may leave portfolios heavily exposed to a handful of popular stocks.
Other risks include:
- Currency fluctuations, which can affect annual returns.
- Possible changes to India’s USD 250,000 overseas investment limit.
- Increasing competition among brokers, which could reduce foreign exchange spreads and international trading fees over time.
Impact on Indian companies
Wider access to global markets could also change how capital is allocated.
Indian listed companies would no longer compete only with domestic rivals. They would also be competing with global firms for investor money.
That could raise expectations around:
- Corporate governance.
- Transparency.
- Quality and consistency of growth.
Companies that fail to meet those standards could see investors shift capital elsewhere.
At the same time, stronger Indian businesses may benefit. Exposure to global competition could help them benchmark themselves against international peers and attract more informed, long-term investors.
TL;DR:
Zerodha, Groww and other brokerages are expanding into global investing through GIFT City. The move offers new revenue opportunities and helps retain customers, while increasing competition for capital between Indian companies and global firms.
AI summary:
- Zerodha and Groww are expanding global investing offerings through GIFT City.
- India’s demat accounts have risen from 40 million in 2020 to over 190 million.
- Brokerages can earn from FX spreads and international trading fees.
- Investor behaviour and currency movements remain key risks.
- Indian companies may face greater competition for capital from global peers.
