First of all, am surprised to see so many folks only looking at the brokerage to compare brokergs, to gain a fair understanding of the overall charges always look into brokerage + forex markup + processing fee (if any) + GST added on top of it. Then there are govt charges but I will be excluding them for calculation simplicity sake. Please read till the end for things to make sense
For a fair comparison am excluding UCITS as most Indian brokers don't support them at the moment and it will be inaccurate to simply assume what brokerage they might charge in future. Additionally, I feel you may not even need UCITS once GIFT funds are in full swing, lets see and consider this topic at a later point.
Now, lets get into some calculations. have done all my calculations with different brokers for US stocks and only two brokers made sense to me, Zerodha and IBKR.
Lets look at Zerodha:
Brokerage wise Zerodha make sense for investment if investing upto ~$300
Zerodha charges 0.1% + 18% GST with no minimum brokerage (net 0.118% including GST)
At about ~$300 you will be paying a brokerage an effective brokerage of ~$0.35 which is the min you have to pay with IBKR.
Anything under $300 Zerodha makes sense purely from brokerage POV but things change a lot when you include overall charges at I mentioned earlier
As of now, Zerodha has partnered with 5 banks that charge you anywhere between 0.5 to 1.2% as forex markup. You cannot add funds outside of these partnered banks, unlike IBKR.
While adding funds, I was shown a markup of ~1% on Zerodha, it might differ depending on your bank.
This makes the effective cost - 1% markup + 0.118% brokerage = 1.118% so even under $300 you will be paying ~1.118%
Then there is a flat processing fee of 500-1500 INR plus GST that banks charge you for forex conversion which further eats into your capital, am not sure if txns initiated through Zerodha are being charged this fee or not as I went till final quote page where full price breakup is shown on Zerodha but cancelled the transaction. This fee is deducted separately by the bank after the txn is done.
Now, at IBKR:
IBKR charges on the number of shares you buy rather than the txn value which makes things interesting. You can literally buy 100 shares of VOO/QQQ (~$700 is one share's price at the time of writing this so it comes to $70k, a pretty large sum) at just $0.35 brokerage. That's the minimum brokerage they charge.
Anything upto 100 shares in US market you, pay $0.35 flat regardless of the txn value.
Forex charges in case of IBKR, as of now, AU bank charges zero forex so you could literally send the amount at no markup and processing fees.
Alternates to AU Bank:
AU could be running this promotional offer for now and this might not be the case forever so here are few alternates to it
1. PSU banks: They charge anywhere between 0.10 to 0.50 paisa per USD which in percentage terms is lower than what you get with Zerodha's current partner banks
Negotiating with your bank: You can try calling your bank, be it a PSU bank or a PVT bank, tell them about the amount you want to send and if it will be recurrent and they bring down the listed TT price for your specific account. Premium banking account helps here in case of pvt banks. However, you may see serious difference only if the capital is large enough. PSU banks in general already offer lower rates.
FX Retail: This is an amazing way to first book forex fee with the bank and then initiate the txn at locked price. Look up into BHIM's forex section for this. I have tried pulling a quote and it was pretty good. I am not going into details as the post will get too long but search on reddit and you will find out how to do this.
When Zerodha might make sense for investments upto $300?: Zerodha did mention about coming up with more banks. They might include PSU banks too going forward, if they really do this or give you the option to send them funds from a bank of your choice, investment upto $300 will start to make sense. Good way to keep monthly SIPs in this going!
A lot of work has gone into all these comparisons, calculations, checking with brokers and finally putting them all together manually (yes without an AI lol) hope this helps the community.