I am a US citizen who would like to buy a stock on the Bombay Stock Exchange. How can I do this?

I have looked at various US brokers and they do not seem to offer this service. Additionally I have spoken to several friends from India who suggest only Indian citizens or NRIs can do this. Some have suggested I could send cash to a friend in India (whom I trust implicitly) to manage the investment for me. This does not seem above board and I will not pursue this avenue. Are there any legitimate methods with reasonable fees that enable me to buy a specific stock of interest on the BSE? (not an index fund or a mutual fund).

Thanks.

Napwala's response is not entirely correct. I am a lawyer from India (Financial Services Major in a US Law school) working in the US and do international tax work. I am intimately aware of this and structured these investments in the past.

Any Person of Indian origin can buy and own stocks in India. This is done through the "Portfolio Investment Scheme" managed by the RBI. The process is to submit documents to an authorized bank and conduct all trades through them only.

There are other ways through which one can invest in the Indian market. Just need to structure the investment very carefully to ensure compliance, the only variable in your case is that you are truly a foreigner.

One of the avenues to consider is one of the several india focussed funds like Eaton Vance or someone else. But their expenses are fairly high (5-7%).

Another route is through the set up of an investment company to invest through a treaty jurisdiction. Quite complicated but doable. I can help advise if interested.

You cannot be serious, Bombay? I swear i hear something "new" everyday

By Law you can not buy stocks in India if you do not live in India. I am a citizen of India and even I can not buy stocks there. Reason? I am a Non Resident Indian (NRI). Only Resident Indians can buy stocks.

There are loopholes in the process. Like you can give the money to your friend in India. He buys it on his name. And later when you ask him to sell it, he returns the money to you. But here. (1) you are trusting your friend too much (2) You will send money to India. Your dollars will be converted to Rupees with no problem. But when it comes to converting Rupees to Dollars. Believe me, its not allowed by law.

I have answered this in my previous posting. I mentioned that when you want to bring money out of India. ie. convert Rupees to say USD, it is allowed only upto a certain limit. And that limit is too low.

Bottomline. With so many hassles, its not worth putting money there in individual stocks. You are better off with India Fund (IFN) or buy stocks of Indian companies who trade at New York. Infosys and Satyam for example

this might help
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Stocks Market
Financial Services

If you want to invest in the Indian market, why go through all this hassle? Why don't you invest in Indian stocks listed as ADRs or ADS' in American exchanges such as Infosys, Tata motors, Dr.Reddy's, Reddiff, etc.. This way your commisions are lower as they are not international trades and you don't have to go through all the hassles of paperwork with an indian broker.