How to invest in Japan Stocks and ETFs from India

When Indian investors look beyond the US for global exposure, Japan often comes up as a natural candidate. 

It’s the world’s third-largest economy, home to iconic companies like Toyota, Sony, Nintendo, and Fast Retailing, as well as cutting-edge leaders in semiconductors, robotics, and automation. Add to that broad benchmarks like the Nikkei 225 and TOPIX, and Japan becomes an obvious part of any serious global allocation.

For an Indian investor, the question isn’t whether Japan is important, it’s how to actually get in. Do you buy shares directly in Tokyo? Pick an ETF listed in New York? Look at UCITS funds in London or Frankfurt? Or stay domestic with an India-based feeder fund? Each choice comes with its own mix of costs, taxes, and estate implications.

This blog puts everything together - the actual ways Indians can invest in Japan, the taxes and costs involved, and which route makes the most sense depending on your portfolio and preferences.

Table of Content

• Can Indians Invest in Japanese Stocks?
• Way 1: Direct Japanese stocks on the Tokyo Stock Exchange (TSE)
• Way 2: UCITS Japan ETFs on LSE or Xetra
• Way 3: US-domiciled Japan ETFs
• Way 4: US-listed ADRs of Japanese Companies
• Way 5: India-domiciled options
• Taxation: How Your Returns Are Treated in India
• Platforms that helps Indians invest in China
• FAQs
• Conclusion

Can Indians Invest in Japanese Stocks?

Yes. Indian residents are permitted to invest in overseas equities, including Japanese stocks, under the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India (RBI).

Under LRS, each individual can remit up to USD 250,000 per financial year for permitted capital account transactions, which includes purchasing foreign shares and ETFs.

The five practical routes to gain exposure to Japan are:

• Direct Japanese stocks on the Tokyo Stock Exchange (TSE)
• UCITS Japan ETFs listed on LSE or Xetra
• US-domiciled Japan ETFs (like EWJ, DXJ, HEWJ)
• US-listed ADRs of Japanese companies
• India-domiciled funds/ETFs with Japan exposure

Important to know:

• The annual LRS limit is USD 250,000 per individual.
• Remittances above ₹10 lakh attract TCS (Tax Collected at Source) at the bank level.
• All foreign assets must be disclosed in your Indian Income Tax Return (ITR).

Direct Japanese stocks on the Tokyo Stock Exchange (TSE)

As an Indian investor, you can directly invest in Japanese companies listed on the Tokyo Stock Exchange (TSE). These shares are held in your account and settled in Japanese yen (JPY), with access made possible through global brokerage platforms like Paasa.

Popular Japanese Companies:

• Toyota Motor (7203.T)
• Sony Group (6758.T)
• SoftBank Group (9984.T)
• Honda Motor (7267.T)

Key points:

• You own the real shares of Japanese companies in your brokerage account.
• Shares trade in JPY. You need to convert INR into foreign currency before investing
• Most stocks on TSE trade in lots of 100 shares, so the minimum investment can be larger compared to U.S. markets. 
• Market hours run in two sessions: 9:00–11:30 and 12:30–15:00 Japan time (5:30–8:00 and 9:00–11:30 IST).
• Dividends face Japanese withholding tax by default. Under the India–Japan tax treaty, this can be reduced to 10% if the right paperwork is filed. Dividends are taxed again in India at your slab rate, with foreign tax credit available.
• Capital gains on listed shares are not taxed in Japan for foreign investors, but they are taxable in India as per Indian rules.
• All investments must be routed under RBI’s Liberalised Remittance Scheme (LRS). Annual limit is USD 250,000 per individual. Remittances above ₹10 lakh attract TCS at the bank. Foreign assets must be disclosed in your ITR.
• Platforms like Paasa and IBKR require a one-time JASDEC registration to enable Japan trading permissions.

Pros:

• No US estate tax exposure
• Wide range of companies to choose from, beyond the big global names.
• Strong liquidity in large caps, with clear regulatory framework.

Cons:

• 100-share trading units make the minimum ticket size relatively large.
• No fractional shares, so harder to invest smaller amounts or rebalance precisely.
• Withholding tax on dividends and treaty paperwork adds complexity, but choosing a platform like Paasa ensures the India-facing compliance and tax side is handled smoothly.

UCITS Japan ETFs on LSE or Xetra

Another practical way for Indians to invest in Japan is through UCITS ETFs domiciled in Ireland or Luxembourg. These Europe-domiciled funds give exposure to Japanese equities while being regulated under the UCITS framework. They trade on exchanges like the London Stock Exchange (LSE) and Xetra (Germany), and are built specifically for international investors.

For Indian investors, UCITS Japan ETFs are often the cleanest and most tax-efficient route to Japan. They sidestep U.S. estate tax, handle Japanese dividend withholding at the fund level, and provide access to a diversified basket of Japanese companies including Toyota, Sony, Nintendo, Fast Retailing, and Keyence.

Popular examples include:

• iShares MSCI Japan UCITS ETF (Ireland domiciled)
• Xtrackers MSCI Japan UCITS ETF (Luxembourg domiciled)
• Lyxor Core MSCI Japan (DR) UCITS ETF (Ireland domiciled)

If you want a deeper dive on why UCITS ETFs are often better suited for Indian investors, see our detailed blog here: Why Indian Investors Should Choose UCITS

Key points:

• Ireland or Luxembourg domiciled ETFs, regulated under UCITS. Listed on LSE or Xetra in USD, GBP, or EUR.
• Requires a global platform like Paasa, since most India-focused apps do not provide UCITS access.
• Underlying Japanese company dividends (Toyota, Sony, Nintendo) face Japanese withholding tax, but this is handled at the fund level. Investors simply receive net distributions.
• In India, dividends are taxed at your slab rate. Capital gains from equity ETFs held for more than 12 months are taxed at 12.5% (with a ₹1.25 lakh annual exemption); short-term gains (≤12 months) are taxed at 20%.
• UCITS ETFs avoid U.S. estate tax risk, making them safer for HNIs and family offices with larger allocations.

Pros:

• No U.S. estate tax exposure.
• Diversified access to the Japanese equity market through a single instrument.
• Traded on major European exchanges with good liquidity.

Cons:

• Must route via LRS (USD 250,000 annual cap, TCS, paperwork).
• Expense ratios slightly higher than U.S. ETFs (typically 0.25–0.5 percent).

US-domiciled Japan ETFs

For Indian investors who already participate in US markets, one of the easiest ways to gain exposure to Japan is through US-domiciled ETFs. These ETFs are listed on American exchanges, priced in USD, and can be purchased legally under RBI’s LRS through platforms like Paasa.

Many Japanese indices are packaged into US-listed ETFs to make them accessible to global investors. This allows Indians to access Japan’s equity market without directly trading in Tokyo or European exchanges.

Popular options include:

• iShares MSCI Japan ETF (EWJ) – the flagship ETF tracking large and mid-cap Japanese companies such as Toyota, Sony, and Keyence.
• WisdomTree Japan Hedged Equity Fund (DXJ) – provides exposure to Japanese equities while hedging yen–USD currency risk.

Key points:

• US-domiciled ETFs, regulated under US law, traded in USD on NYSE/NASDAQ.
• Provide diversified exposure to Japanese equities. EWJ covers the MSCI Japan Index, while DXJ and HEWJ add currency-hedging options.
• Dividends face 25% US withholding tax for Indian investors after filing W-8BEN. Unlike UCITS, there is no reclaim option.
• No US capital gains tax for non-residents. Gains are taxed in India at 12.5% LTCG (>12 months) or at slab rates for short-term holdings.
• US-situs assets are exposed to US estate tax if holdings exceed USD 60,000.
• Fully legal under RBI’s LRS with an annual cap of USD 250,000 per individual.

Pros:

• Easy access if you already invest in US stocks (Paasa, INDmoney, or Vested).
• High liquidity on US exchanges.
• Multiple ETF choices beyond EWJ, including cost-efficient and hedged products.
• Clean execution in USD with familiar settlement and reporting.

Cons:

• 25% US dividend withholding with no treaty-based reclaim option.
• US estate tax exposure above USD 60,000.
• Less tax-efficient compared to UCITS ETFs for larger allocations.

US-listed ADRs of Japanese Companies

Several large Japanese companies are available in the US as American Depositary Receipts (ADRs). ADRs are certificates issued by US banks that represent shares in foreign companies, making it easier for global investors to buy and sell them on US exchanges in USD.

For Indian investors, ADRs of Japanese companies like Toyota (TM), Sony (SONY), and Mitsubishi UFJ Financial Group (MUFG) provide an accessible way to own some of Japan’s most recognizable names through US markets. These can be purchased legally under RBI’s LRS through Paasa.

Key points:

• ADRs are issued by US banks and represent one or more shares of a foreign company. They trade on US exchanges in USD.
• Popular Japanese ADRs include Toyota (TM), Sony (SONY), Mitsubishi UFJ Financial (MUFG), Nippon Telegraph & Telephone (NTTYY), and Honda (HMC).
• ADR dividends are subject to Japan’s domestic withholding tax, which is typically reduced to 10 percent for Indian residents under the India–Japan tax treaty when proper documentation is filed. Without treaty paperwork, brokers may apply higher domestic rates.
• No US capital gains tax for non-residents. Gains are fully taxed in India (12.5% LTCG if >12 months; slab rate for STCG).
• As US-situs assets, ADRs are exposed to US estate tax if holdings exceed USD 60,000.
• Eligible under RBI’s LRS limit of USD 250,000 per year.

Pros:

• Exposure to leading Japanese companies through familiar US markets.
• Traded in USD with decent liquidity.
• Easier to buy than direct shares on the Tokyo Stock Exchange (TSE).
• Fully legal under RBI’s LRS and supported by Paasa.

Cons:

• Dividends subject to Japanese withholding tax, with treaty paperwork needed to bring it down to 10 percent.
• US estate tax exposure above USD 60,000.
• Limited to the biggest Japanese companies; does not cover the broader Japanese market.

India-domiciled funds with Japan exposure

For Indian investors who want Japan exposure without the complexity of remitting money abroad, India-domiciled mutual funds and ETFs are the simplest option. These are SEBI-regulated products, denominated in INR, and can be purchased through regular brokers or mutual fund platforms without using RBI’s LRS.

Most of these schemes are structured as feeder funds - meaning the Indian AMC collects money in INR and invests it into an offshore “master fund” that holds Japanese equities. Some ETFs also directly track Japanese indices like the Nikkei 225 or MSCI Japan.

Popular options include:

• Edelweiss Greater Japan Equity Fund of Fund – invests into a global Japan-focused equity strategy.
• Nippon India Japan Equity Fund – a domestic fund that takes concentrated exposure to Japanese markets.
• Motilal Oswal MSCI Japan ETF – direct ETF tracking MSCI Japan (if active and available under SEBI limits).

Key points:

• You buy units of an Indian MF/ETF in INR. The AMC manages the offshore exposure through feeder or direct structures.
• Accessibility: Easy to buy through Indian brokers, MF distributors, or platforms. No LRS paperwork or foreign account setup required.
• Taxation: Treated as non-equity mutual funds in India unless SEBI-recognised as equity. Capital gains are taxed at 12.5% LTCG (>12 months) and slab rate for STCG under the new regime.
• Limits: SEBI caps the overall industry’s overseas investment (USD 7 billion for MFs, USD 1 billion for ETFs). When limits are hit, AMCs can pause new inflows.
• Fully domestic: no LRS usage, no TCS deduction, no foreign asset reporting in your ITR.

Pros:

• Easiest way to get Japan exposure - denominated in INR.
• No LRS paperwork, no foreign remittance costs, no TCS.
• Regulated by SEBI, accessible on all Indian platforms.
• No estate tax or foreign tax credit filing required.

Cons:

• Dependent on SEBI’s overseas investment cap; subscriptions can be paused.
• Limited number of Japan-focused funds available.
• Indirect exposure: performance depends on the chosen master fund or index replication.
• Expense ratios can be higher compared to buying offshore ETFs directly.

Taxation: How are your returns treated in India?

When investing in Japan through offshore routes, you face two layers of taxation:

• Foreign-side taxes: dividend withholding tax (WHT), any capital-gains tax at source, and potential estate/inheritance tax in the asset’s domicile.
• Indian taxation: how those dividends and capital gains are taxed when you file in India.

The interaction of these two layers drives your net outcome. Below is a structured comparison across the five practical routes.

Foreign-side taxes

Indian taxation
Assuming you are a resident individual in India (FY 2025–26 rules):

If you are already investing in Japan, or are considering it and need clarity on how taxation applies to your situation, you can reach out to us at [email protected]

Our team works closely with HNIs, family offices, and institutional investors, and we have developed deep expertise in navigating the nuances of cross-border taxation, compliance, and reporting. We can help you understand the implications in detail and ensure your global investments are managed with the right structures in place.

Platforms that help Indians invest in Japan

While the investment routes are clear, access depends on the platform you use. Below is a comparison of commonly used platforms by Indian investors, showing which Japan routes they enable and what additional services they provide.

Want a deeper breakdown?
If you’re comparing platforms, we’ve written detailed guides:

• Paasa vs Interactive Brokers
• Paasa vs INDmoney
• Paasa vs Vested
• Paasa vs Kristal

They cover infrastructure, features, FEMA compliance, tax handling, and investor fit in detail, so you can choose the platform that best matches your needs.

FAQs

Can Indians invest directly in Japanese stocks?
Yes. Indian residents can buy Japanese shares on the Tokyo Stock Exchange (TSE) via global brokers like Paasa or Interactive Brokers under RBI’s Liberalised Remittance Scheme (LRS).

What are the ways Indians can invest in Japan?
Indian investors have five practical routes to gain exposure to Japan:

• Direct Japanese stocks on the Tokyo Stock Exchange (TSE)
• UCITS Japan ETFs listed on LSE or Xetra
• US-domiciled Japan ETFs (like EWJ, DXJ, HEWJ)
• US-listed ADRs of Japanese companies such as Toyota, Sony, Honda
• India-domiciled Japan funds/ETFs offered by AMCs as feeder funds or ETFs

Do UCITS Japan ETFs have estate tax risk?
No. UCITS funds are domiciled in Ireland or Luxembourg, so US estate tax does not apply. They are usually safer for larger allocations.

Do US-domiciled Japan ETFs have estate tax risk?
Yes. They are US-situs assets. If your holdings exceed USD 60,000, US estate tax exposure kicks in for non-resident investors.

Can NRIs invest directly in Japanese stocks?
Yes. NRIs can open an account with global brokers like Paasa, IBKR or Saxo that provide Japan market access. Unlike Indian residents, NRIs don’t need to use LRS — they can invest from their overseas bank accounts.

Do NRIs face Japan’s inheritance tax if they hold Japanese shares?
Yes. Any non-resident (including NRIs) holding Japan-situs assets like TSE shares is subject to Japan’s inheritance tax regime. UCITS ETFs or India-domiciled funds avoid this risk.

What are some popular Japan ETFs Indians can buy?

• EWJ (iShares MSCI Japan ETF) – flagship US ETF
• DXJ (WisdomTree Japan Hedged Equity) – yen-hedged US ETF
• iShares MSCI Japan UCITS ETF – Ireland domiciled
• Xtrackers MSCI Japan UCITS ETF – Luxembourg domiciled

Can I invest in Japan through Indian mutual funds?
Yes. Some AMCs offer feeder funds or ETFs focused on Japan, like Edelweiss Greater Japan Equity FoF or Nippon India Japan Equity Fund. These are INR-denominated and don’t need LRS.

Do India-domiciled Japan funds have foreign tax credit benefits?
No. Any foreign WHT is adjusted at the fund level, so investors in India don’t see it directly. You’re simply taxed under Indian MF rules.

What’s the difference between Nikkei 225 and TOPIX?

• Nikkei 225 is price-weighted and covers 225 large companies.
• TOPIX is market-cap weighted and includes all TSE Prime listings (~1,600 stocks), making it broader.

Can I use Groww, Zerodha, or INDmoney to buy Japanese shares?

• Zerodha/Groww: No direct access to Japan.
• INDmoney/Vested: Limited to US-listed ETFs and ADRs, not TSE or UCITS.
• Paasa/IBKR: Full access, including direct TSE and UCITS ETFs.

Do I need a special code when remitting under LRS to buy Japanese stocks?
Yes. The correct purpose code for equity investment abroad must be used when wiring money through your bank under LRS.

How are capital gains on Japanese ETFs taxed in India?
For foreign securities:

• Held >24 months: LTCG at 12.5% (no indexation)
• Held ≤24 months: STCG at slab rates

Can NRIs transfer their Japan exposure into Paasa or IBKR India accounts if they move back to India?
Yes, typically via ACATS transfer (for US ETFs/ADRs) or broker-assisted transfer for UCITS and TSE holdings. Paasa supports portfolio migration when Indians relocate back.

Can NRIs use Paasa to invest globally?
Yes. NRIs, just like resident Indians, can invest in global markets using Paasa. The platform supports stocks, ETFs, UCITS funds, and ADRs across regions like the US, Japan, Europe, and more.

What is the investment limit for NRIs on Paasa if funds come from an NRE or NRO account?
If you invest through your NRE or NRO account in India, you can transfer up to USD 1 million per year under RBI rules.

Conclusion

There is no single “best” way for Indians to invest in Japan. 

Each route, whether direct TSE shares, UCITS ETFs on LSE/Xetra, US-domiciled ETFs, US-listed ADRs, or India-domiciled feeder funds addresses a different investor need. The right choice depends on your ticket size, tax considerations, and comfort with cross-border complexity. Having clarity on these factors makes Japan far more approachable and allows you to capture its growth as part of a balanced global allocation.

If you’d like to understand which route best fits your profile, our team at Paasa can help you navigate the options.

About Paasa

Paasa is a global-first investing platform built for Indian investors. For HNIs, family offices, and institutions, we provide structured access not just to the US, but also to Europe, Japan, Switzerland, the UK, and other key markets. 

Whether it’s UCITS ETFs, ADRs, direct TSE shares, or India-domiciled feeders, Paasa enables all the practical routes available today. More importantly, we take care of the India-facing side: LRS flows, FEMA compliance, tax reporting, and INR-based analytics, so you can focus on building a globally diversified portfolio while we simplify the cross-border complexity.

Disclaimer

This blog is for informational purposes only and should not be considered investment, tax, or legal advice. The information is based on publicly available data and our understanding of current regulations, which may change over time. Investing in international markets, including Japan, involves risks such as currency fluctuations, political changes, and market volatility. Past performance is not indicative of future results. Investors should consult their financial, tax, and legal advisors before making any investment decisions.