For years, the simplest way for an Indian to invest abroad was an Indian mutual fund that did it for you: a US feeder fund or an international fund of funds, bought like any other fund, in rupees, with no paperwork. For most investors, that door is now shut.
Why the funds closed
Indian mutual funds can invest overseas only within an industry-wide limit set by the RBI and SEBI: $7 billion, plus a separate $1 billion for overseas ETFs. Once the industry reached it, fund houses stopped taking new money. As of July 2026, Value Research tracked 66 international funds, and 54 were not accepting fresh investments. The few still open cap new SIPs or lump sums, some at ₹5,000 a month.
The limit has been raised before and may be again. But a strategy that depends on a regulatory cap staying open is fragile.
How the two routes compare
| Indian international fund | Direct, under LRS | |
|---|---|---|
| Availability | Mostly closed to new money | Open, up to $250,000 a year per person |
| Choice | A few dozen funds | Thousands of global funds and shares |
| Costs | Two layers: the Indian fund plus the underlying fund | One layer: the fund you own |
| Tax on gains | 12.5% after 24 months | 12.5% after 24 months |
| TCS | None | 20% above ₹10 lakh a year, adjustable against tax |
| Paperwork | None extra | Schedule FA and Form 67 in your return |
| US estate tax | Not applicable | Avoidable with Irish-domiciled funds |
When each makes sense
If you want a small global allocation and can still find an open fund, the Indian fund route is simple. Its tax treatment is now the same as investing directly for units held more than 24 months.
For anyone building a meaningful global portfolio, the direct route wins on availability, choice and cost. The extra work is real, but it is a few schedules in your tax return, not a burden through the year. It is also exactly the part we take off your hands.