Globalization has entered a new phase thanks to the digitalization of international commerce. Data flows are enabling this transformation. Data flows offer new opportunities for trade, innovation, and productivity growth.
Investing in data can boost trade, innovation, and productivity
Data drives innovation and allows for new levels productivity growth. Half of the world today is online. Between 2005 and 2021, global internet traffic will grow 127fold. The rollout of the 5G network will enable the “internet of things”, which will result in a tripling of global internet traffic by 2021.
Data mobility is key to new business models. It facilitates international collaboration as well as research. International ecommerce accounts for around 12 percent of all global goods trade. International trade is a great opportunity for small businesses. They have an international presence, embedded services such as financial payments and logistic support. E-commerce is becoming more popular for services. This applies to professional, financial, education, as well as information technology (IT). Cloud computing is a brand new digital service. It is now a crucial business input.
Traditional goods exports also make use of digital technologies. Businesses can use data from sensors in mining and farming equipment to improve their operations and increase their equipment’s value.
Global data flows such as US Commerce Data form the backbone of global value chain (GVC), which opens up new opportunities for international trade. Global internet and data flow can be used by businesses to offer their services.
Data flow restrictions are growing, however
Regulators and governments need to decide how to maximize digital technology’s benefits while maintaining their national regulations. Globally, data location has experienced a substantial increase.
There are various techniques to restrict the flow of data. And there are many types of restrictions that can be placed on data flow. There are two types of restrictions on data flows: those that prevent data transfers outside of national borders and those that allow cross-border transfers, but require a copy to be kept in the country. Also, there are measures that restrict data transfer beyond national borders. Many measures for data localization include restrictions on data flow.
You may want to restrict data transmission or mandate that data be remain local for a variety of reasons. Privacy regulations are just one reason. It is also important to prevent data from flowing to lower privacy protection jurisdictions. This could result in a decrease in domestic privacy protections. For regulatory purposes, government agencies may require data to be found. These are especially prevalent in the financial industry. To perform their regulatory duties, financial regulators must be able access local financial data.
Another justification for local data storage is cybersecurity. Because data localization lowers the risk of unauthorised access, this is a good reason to require it. Access to online content can also be restricted by data flows restrictions. This can be done for moral, religious, and political reasons. Learn more about US trade data.
The WTO Commitment Supports Digital Trade and Allows for Legal Regulation
Trade rules are vital as they allow digital trade and also act as a stop to government regulation that could limit digital trade opportunities. The World Trade Organization (WTO) was established before the internet. Digital trade is still covered by the WTO rules. The General Agreement on Trade in Services, which is particularly relevant given the expanding scope of services trade, is important. WTO members who have agreed to allow the delivery of services should also allow data to flow across border borders if required for delivery. Incompatible with the GATS national treat commitment, data localization measures that impose a burden on foreign providers by requiring local presence may be considered incompatible. WTO members might argue that a data location measure in compliance with the GATS Article XIV exempt provision is required to reach an enumerated list of public policy exceptions.
Geographical Diversification
Geographic diversification is a way to ensure stability in your portfolio. Over the long-term, markets in developed nations are more stable than those in developing countries. You can invest in the US stock exchange to participate in global economic growth. ETFs that are traded on the US exchange may expose you to other markets. ETFs, such as EWG ETF listed on NYSE invested in large corporations. There are also emerging themes that you can invest on the US stockmarket.
Foreign Exchange – Its Impact
When you invest in the US market, it is crucial to consider the fluctuations of the exchange rates. Over the past several years, the Rupee’s value has declined between 3 and 5% against the US Dollar. Investing on US markets will also require you to invest in the US Dollar. This means you are taking on some risk. You can get an additional boost to your portfolio by gaining US Dollars. If you send money from the US to invest, your bank might charge an FX spread or conversion fee. The bank can charge this fee anywhere from 0.5 to 2 percent.
Taxation
You should consider the tax consequences of foreign investments to ensure that your efforts are worthwhile. Double Tax Avoidance Agreements (DTAAs) between the countries prevent the same income from being twice subject to taxation.
Dividend Tax:
For foreign investors, the flat rate 30% tax on dividends coming from the US is available. Foreign investors are subject to a flat rate of 30% tax on dividends received from the US.
Capital Gains Tax:
Capital gains tax is not applicable to your US investments. Foreign capital gains in India will be taxed.
Long-term capital gains (LTCG):
If you’ve own the the stock for 24 months or longer without realising any capital gains, 20% tax is due.
Short-term capital gains (STCG):
You must pay ordinary income tax on all gains from investments lasting fewer than 24 months. These rules are standard income-tax rules.
Consider the new Tax Credited at Source rules. These new rules will apply for all foreign remittances over USD 50. This upfront tax can still be claimed in your annual tax filing.
Your Life Goals
The investment strategy should reflect your personal objectives. Your life goals should be part of your investment plan.
Other fees
For direct investment in US stocks, you need a US brokerage. It is now easier than ever to open a brokerage account with platforms. They don’t charge account opening fees nor annual maintenance fees. For $1 per trade, you can trade up 3 trades per month with zero commission (10 trades for the first month). You can pay up to $6.99 per trade on some platforms. There are also large fees for joining and an annual maintenance fee that can impact portfolio performance. These costs should be known before you sign up for any platform. In order to fund your brokerage account, money will need transfer from your bank account. FX and transfer fees may apply depending on where you bank it.
For frequent trading, multiple fund transfers and transactions could result in additional fees. You may also be subject to multiple currency conversion or remittance costs.
Direct stock investment in the US is only possible through a US brokerage. With platforms, it is easier than ever before to open a brokerage account. There are no account opening fees or annual maintenance fees. You can trade up to 3 trades per month for $1. There is no commission (10 trades in the first month). Some platforms allow you to trade up to $6.99 per transaction. You may also have to pay large fees for membership and an annual fee for maintenance. These fees can affect portfolio performance. Before you sign up for any platform, it is important to know these costs. To fund your brokerage account, you will need to transfer money from your bank account. Depending on the bank you use, transfer fees and FX may apply.
