INDA vs INDY vs Nifty 50: Should NRIs Invest in India Directly or Through US-Listed ETFs (2026)?

Should NRIs Invest in India Directly or Through US-Listed ETFs?

If you’re an NRI investing in India, chances are you’ve faced this exact question:

Should you invest in India through US-listed India ETFs like INDA or INDY, or should you invest directly in Indian index funds such as the Nifty 50?

On the surface, INDA and INDY feel like the obvious choice.

They’re simple. Familiar. USD-denominated. One click away in your US brokerage account.

And yet, over time, many NRIs notice something uncomfortable:

India keeps growing, but their India returns don’t fully reflect it.

That disconnect isn’t accidental.

It comes down to currency, structure, and time horizon.

This article breaks down, with real numbers, whether NRIs should invest in India directly or via INDA/INDY.

What Investing in INDA or INDY Really Means

When you invest via INDA or INDY, you are not investing in India the same way a domestic Indian investor is.

You are:

• Investing through a US-domiciled ETF

• Viewing India returns through a USD lens

• Accepting currency conversion every year, not just at exit

• Paying higher expense ratios for convenience

When you invest directly in Indian index funds:

• Your returns compound in INR

• You participate directly in India’s domestic growth

• FX matters only when you convert back

• Costs and tracking efficiency are structurally better

Same companies. Same economy. Very different outcomes.

INDA / INDY vs Nifty 50: The Numbers That Matter

Rather than debating opinions, let’s look at actual outcomes across multiple time horizons, including FX impact.

5-Year Comparison (Approx.)

Over the last 5 years, USD strength dominated returns, making US-listed India ETFs look competitive.

10-Year Comparison (Approx.)

Over a decade, equity compounding begins to dominate, but FX still meaningfully reduces USD-reported returns.

20-Year Comparison (Approx.)

Over long horizons, Indian equity compounding overwhelms FX cycles, even after accounting for rupee depreciation.

Why FX Confuses Most NRI Investors

Here’s the key distinction most people miss:

• Currencies move in cycles

• Equities compound

FX decides winners in 3–5 year windows.

Investment structure decides winners over 15–25 years.

The mistake many NRIs make is using a short FX-heavy period to make a long-term asset allocation decision.

Does Rupee Depreciation Mean Investing in India Directly Is a Bad Idea?

Only if you believe all of the following are permanently true:

• The rupee will weaken 4–5% every year forever

• India’s growth will never translate into currency stability

• FX will always overpower equity compounding

If that were true, India would not attract long-term capital.

History does not support that assumption.

What history shows instead:

• Periods of INR weakness

• Followed by long phases of slower depreciation or stability

• With equity compounding continuing underneath

A Smarter Framework for NRIs

Instead of asking which is better, ask:

Over what time horizon does each structure make sense?

• Short to medium term, USD needs, simplicity first
  → INDA / INDY can make sense
  
  

• Long-term wealth creation linked to India’s growth
  → Direct Indian index investing matters
  
  

• Large or evolving portfolios
  → A blended approach, adjusted over time

The mistake isn’t choosing INDA. The mistake is choosing it by default.

Conclusion

The last five years rewarded USD exposure.

That does not mean the next twenty will.

FX decides the winners of a phase.

Structure decides the winners of a lifetime.

If you’re an NRI, the goal isn’t to be ideological — it’s to be intentional.

Understand:

• How FX works in the short term

• How equity compounding works over decades

• What different investment structures actually cost you

That clarity, not the ETF ticker, is what determines how much of India’s growth you actually keep.