U/s 6 of the IT Act, 1961, an individual who is an Indian Citizen or is of Indian origin, is considered to be an NRI.

If an individual’s taxable Indian income exceeds Rs 15 Lakh then that individual is considered to be a resident, in case the person:

  • Visits India for 120 days or more in the preceding year

  • Has been in the country for a period of 365 days or more in the previous 4 years.

According to FOREIGN EXCHANGE MANAGEMENT ACT (FEMA), a non-resident indian (NRI) is a person who lives outside India for more than 182 days. The FEMA which is overseen by the Reserve Bank of India (RBI), governs the purchase and acquisition of immoveable assets in India by non-resident Indians.


Investing in the stock market is an attractive avenue for wealth creation, and Non-Resident Indians (NRIs) are increasingly showing interest in participating. Navigating the complexities of the stock market, especially as an NRI, requires a nuanced understanding of regulations, currency risks, and global economic trends. This article aims to provide insights into the world of NRI stock market investment, exploring strategies, challenges, and important considerations for those looking to build a diversified and profitable investment portfolio.


Investing in the Indian stock market has become increasingly accessible for Non-Resident Indians (NRIs) thanks to various intermediaries. However, these investments are subject to specific guidelines outlined by regulatory bodies like the Reserve Bank of India (RBI). These guidelines ensure compliance and clarity for NRIs investing in Indian stocks.

The RBI plays a pivotal role in regulating NRI investments in the Indian stock market. These regulations are designed to safeguard the interests of both NRIs and the Indian economy. NRIs are classified into two categories concerning investments: Non-Resident External (NRE) and Non-Resident Ordinary (NRO) accounts. These accounts serve different purposes and have distinct tax implications.

NRE Accounts: NRIs can open NRE accounts to hold and manage foreign earnings that they want to repatriate to India. Investments in Indian stocks made through NRE accounts are entirely repatriable, meaning the principal amount and earnings can be sent back to the NRI’s foreign account without restrictions.

NRO Accounts: NRO accounts, on the other hand, are for managing income earned in India, such as rental income, dividends, or pension. Investments in Indian stocks through NRO accounts are non-repatriable, and there are limits on repatriating funds to the foreign account.



These options offer a fixed return on investments. These products generally invest in government securities and bonds. The major emphasis is in offering somer income benefits while securing your principal.


To earn a fair interest on the principal amount by starting a fixed deposit with NRE or FCNR accounts.

  • The expected 6% annual return on the principal which is at least better than principle lying idle.

  • Opening NRO fixed account is not recommendable as it offers lower interest (3 to 5%) and interest is subjected to be taxed at the source.



The non-negotiable money market instrument is issued in the form of promissory notes or demat and its maturity period is between 7 days(minimum) to 1year(maximum). These deposits offer more liqidity than time deposits. As an NRI one can subscribe to CDs on a repatriable basis. It generally offers better returns than fixed deposits.


These bonds are issued by companies or government institutes. Banks can also issue Perpetual Bonds under Tier-1 capital. The returns are comparatively higher than a fixed deposit but your principal amount gets locked for some time.


  • The monthly interest on fixed-income products can be used to invest in mutual funds in the form of SIPs.

  • Investing a small amount in fixed-income options generally doesn’t yield good results.

  • As a rule of thumb, don’t invest the amount in fixed-income options until you think it is too big to take even a slight risk.

  • In many cases, hybrid funds are a better option than fixed-income schemes.



If you are interested in earning high returns over a reasonable period of time then mutual funds are the best option for you.

Mutual funds allow you to enjoy the benefits of the equity market while at the same time offering better security for your principal amount than the stock market.

There are different types of mutual funds for NRIs to choose from depending on your risk appetite and available principal. The best way to invest in Indian mutual funds is through your NRE account.


These funds invest in high-value, well-established companies that are not very volatile and thus offer better security to the investment. A good percentage of your investment can be made to large-cap funds.


These funds invest in small and medium-sized companies that are relatively new, smaller in size and are easily affected by the market’s volatility. These funds are more volatile in nature and are easily affected by the market’s highs and lows.

Needless to say, they are riskier but at the same time more rewarding. If investments are managed well, they can offer good returns over a reasonable period of time.


Sector funds invest in only specific sectors of the market like real estate, IT, pharmaceuticals and so on. Understandably as these funds are dedicated to specific sectors only they are sharply affected by the performance of these sectors and any important news/decision taken in regard to these sectors.


They are aimed at offering the advantage of the market while at the same time avoiding the risk. These funds are flexible and switch between equity and debt assets. In balanced funds around 65% is invested in equity while the rest goes to debt. In monthly income plans, the equity investment is not more than 25% while the rest goes to debt.


  • In order to take the best advantage of different mutual funds you should diversify your portfolio:

  • Invest the highest amount in Large cap funds followed by mid and small-cap funds.

  • Opt for SIP (Systematic Investment Plan) to enjoy the best returns over a period of time.

  • At each dip in the market, you can invest a reasonable lump sum amount.


Investment in the stock market is one of the best investment options for NRI investors who are interested in accruing a good return on their investment and are ready to accept the risks involved. In fact, the market fluctuation plays a vital role here.

An NRI can invest in the stock market through the Portfolio Management Scheme of any bank. They can also invest directly in initial public offers (IPO). However, NRIs cannot go for day trading.

This is undoubtedly the riskiest investment but at the same time offers the highest returns if managed well. So it is best to hire a dedicated manager who should be able to consult you and guide your investment according to the present market condition.

It is advisable that if you invest a very big amount like 25 lacs then you can hire well-established companies to manage your portfolio.


  • Choose a few good stocks in different categories (maximum 3-4) and opt for SIP that would offer you the advantage of volatility.

  • Instead of relying on daily market fluctuations, opt for buying a good fund at a certain dip (say 5-7%) and selling the same at a reasonable profit (10-15%). You can just instruct your sharebroker and he will do the rest.

  • In order to enjoy good returns on market highs while minimizing the loss without much frequent monitoring, you can opt for any of these options that are actually a bunch of several companies rather than a single entity hence the risk is reasonably divided and thus minimized.



Real estate is one of the most popular investment options for NRI that offers good returns over a period of time. Though one can earn decent returns on the invested amount depending upon several factors, maintaining the property needs active involvement and finding a buyer is not always an easy task.

Besides, the property requires a considerably high amount. This amount is locked until you are able to sell the property. One thing to note here is that you need to have the NRO account especially if you get the rent receipts.


  • Rely on a legally qualified property agency to buy the property.

  • It is always better to seek references from your NRI friends and colleagues.

  • Hire a legal professional to guide you through all the legalities and ensure that the property you want to buy is clear of any dispute or other legal complexities.

  • Prefer land to flats or houses as land is easier to sell and its value can appreciate quite decently.


The National Pension Scheme is an easily accessible, low-cost, tax-efficient and flexible retirement savings account. Under the NPS, the individual contributes to his retirement account.

The benefit subscribers ultimately receive depends on the amount contributed, the returns made on the contributions and the period of contributions.

An NRI between the ages of 18 and 60 years, and complying with the KYC norms, can open an NPS account. However, it is mandatory to invest 40 per cent of the investment in an annuity scheme on a regular retirement.

NRIs can contribute to the NPS through fund transfers from their NRE/NRO account. Individual contributions to the NPS are subject to a ceiling of 10% of the gross national income. NPS is distributed through authorized entities called Points of Presence (POP). Almost all the banks in India are enrolled to act as Points of Presence under NPS.

An NPS account can only be opened by individuals, and not jointly. After the initial form is submitted, a Permanent Retirement Account Number (PRAN) is allotted.

Just like everyone else, NRIs also should put financial and physical preparation for their old age on top of their priority list. A proper mix of these investment options for NRI can help them secure and grow their hard-earned money for financial goals.


The Indian capital markets are attractive investment avenues. And so, they find investors from across the globe. Among this investor fraternity, NRIs occupy a significant portion. NRIs may migrate to affluent countries for employment, education, and business, but when it comes to equity investments, their home country remains one of their favourites.

Did you know that there are some tax implications for NRIs on the capital gains earned through equity instruments? And these implications could go on to disturb financial plans too. Hence, if you are an NRI, you ought to be aware of these implications before going deeper into equity investments.

Profits or gains arising from transfer of a capital assets are called “capital gains”. Long Term Capital Gains (LTCG) refers to gains arising out of sale/transfer of financial assets held for more than 1 year and securities held for less than 1 year are subject to Short Term Capital Gains (STCG). However, long term capital gain from equity investments up to Rs. 1 lakh is exempted from tax.

In India, NRIs are charged long and short term capital gains tax and it is deducted at source. Below are the TDS rates as on 1st April 2022:




EDU. CESS (4%)













As an NRI, you can engage in trading activities on the Indian stock market with the help of a trading and demat account. You can easily open one with an authorized bank or financial institution by submitting a few basic documents as listed below:

  • Copies of your Indian Passport, Foreign Passport (if any), copies of PIO card, OCI card

  • A valid copy of your Visa

  • PAN Card

  • FEMA (Foreign Exchange Management Act) declaration form

  • FATCA (Foreign Account Tax Compliance Act) declaration form

  • Overseas Address Proof

  • Photograph

  • KYC


As an NRI you can trade in the Indian stock market. However, one of the most important aspects to keep in mind is that since you will be living abroad, you require a party acting on your behalf. Thus, you can rely on the following three options while investing in the Indian equities market:

  • Mandate Holder: You can nominate a mandate holder to help carry out your investments in India and manage your NRE and NRO accounts.

  • Power of Attorney: You can also invest in stocks in India by appointing a power of attorney who is an Indian resident. Do note that you must complete the procedure and submit the corresponding documents to a bank if you want a power of attorney to act on your behalf.

  • Brokerage Firm: You can also participate in trading in stocks in India via brokers if you complete the KYC procedure and fulfil other compliance guidelines.

To trade in Futures and Options, you will only be able to use a non-repatriable NRO Account and you will need your Custodial Participant code. NRIs are allowed to trade only on the delivery basis in Indian equities. Moreover, NRIs are not allowed to trade in the currency derivatives and commodities.


You can opt for an NRE account repatriation, repatriation from an NRO account, or repatriation from your FCNR account. There are repatriation guidelines and limitations for each type of account you hold in India.

  • NRE Accounts

You can deposit your current income into your NRE account from abroad. Your current income can include your salary, profits from a business, investment earnings and interests received. You are permitted to fully repatriate all the funds in your NRE account.

  • FCNR Accounts

You can freely repatriate funds from your FCNR account. The deposits in the FCNR account are from a foreign source and thus does not have any repatriation limits, just like an NRE account.

  • NRO Accounts

Unlike NRE account or FCNR accounts, there are certain limitations on repatriation from an NRO account. Repatriation from an NRO account is possible after taxes have been deducted from the income. The current income in NRO accounts is from earnings in India and is liable to be taxed. There is a repatriation limit of USD 1 million in a financial year on income from the sale of any moveable or immovable assets in India. Any income from inheritances, rent from property holdings, or the sale of any property will be taxed and then eligible to be repatriated. Returns in investments made through funds in an NRO account are not permitted to be repatriated.


Navigating NRI stock market investment requires a thoughtful approach, combining regulatory compliance, risk management, and strategic decision-making. As the Indian economy continues to grow and evolve, NRI investors can capitalize on the diverse investment opportunities available. Keeping abreast of regulatory changes, understanding tax implications, and employing prudent investment strategies will empower NRIs to make informed decisions and build a resilient and profitable stock portfolio. NRI investors should leverage the expertise of financial advisors and utilize technology to stay connected with the Indian market, ensuring a seamless and successful investment journey.

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