From Accounts To Approvals: A Step-by-Step Guide For NRIs Investing In India

With the right accounts and approvals, NRIs can legally invest in India’s stock market and earn good returns.

Many NRIs invest in India to grow wealth and stay connected.

A Non-Resident Indian (NRI) is an individual of Indian origin who resides outside India for work, business, or other purposes for more than 182 days in a financial year. Many NRIs look to invest in India, not only to grow their wealth but also to maintain a financial connection with their homeland.

India’s rapidly expanding economy and strong stock market performance have made it an attractive investment destination. However, NRIs must follow specific guidelines laid down by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) to invest legally and securely in Indian equities. Unlike resident investors, NRIs must comply with certain processes and restrictions to begin trading in the Indian stock market.

Here’s How NRIs Can Invest in the Indian Stock Market

-NRIs can invest in Indian equities through two primary routes: the Portfolio Investment Scheme (PIS) and the Non-PIS route.

Under the PIS route, NRIs can buy and sell shares and convertible debentures of Indian companies through a recognised stock exchange, using a designated NRE (Non-Resident External) or NRO (Non-Resident Ordinary) bank account. This account must be linked with PIS approval from the RBI, and investments must be made through a registered stockbroker.

– An NRE (Non-Resident External) or NRO (Non-Resident Ordinary) savings account.

– A PIS account, which is necessary for buying and selling shares listed on Indian stock exchanges.

– A demat account to hold securities in digital form.

– A trading account with a SEBI-registered stockbroker to execute trades.

The PIS account is linked to either the NRE or NRO account and must be approved by a designated bank. Under the PIS route, NRIs can invest in shares of listed companies on a repatriable (funds can be sent abroad) or non-repatriable basis. All buy and sell transactions are routed through the PIS account, and the bank reports these transactions to the RBI.

The non-PIS route is used for investments like Initial Public Offerings (IPOs), mutual funds, government bonds, debt instruments, and exchange-traded funds (ETFs). This route does not require PIS approval and offers more flexibility in product choices. However, this route does not permit direct buying and selling of secondary market shares.

It’s important to note that NRIs are not allowed to do intraday trading (buying and selling stocks on the same day). Only delivery-based trading is allowed, where the shares must be held for at least one day.

NRIs must also be aware of RBI sectoral limits, which restrict foreign investment in certain sectors. Taxation is another important aspect—long-term and short-term capital gains taxes apply, and brokers usually handle TDS (tax deducted at source) on behalf of NRIs.

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Many Indian banks and financial institutions now offer NRI investment services, making the entire process seamless by handling compliance, documentation, and account setup.

By following the right steps and staying compliant with Indian regulations, NRIs can actively and legally participate in the Indian equity market and benefit from the country’s growth story.

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