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The below content is purely for informational purposes and is not intended to constitute advisory of any kind. Please note, these are in-depth articles which are best viewed on large screen devices like laptops, desktops and tablets. The position reflected in this article has been updated as of February 15, 2024.

Non-Resident Indians (NRIs) are increasingly investing in India, drawn by the country’s strong economic growth, favourable demographics, and a wide range of investment options.

 

Investment options for NRIs in India

As an NRI you can invest in a wide range of assets in India, including equities, fixed income investments, mutual funds, Fixed Deposits (FDs), real estate, gold investments, Alternative Investment Funds (AIFs), and government backed securities. NRIs can diversify their investment portfolio to align with their risk tolerance and financial objectives.

 

Investment options for NRIs across asset classes

Equity instruments: As an NRI you can invest in individual stocks, Exchange-Traded Funds (ETFs) and equity mutual funds. To invest in stocks, you will need a demat and trading account under the Portfolio Investment NRI Scheme (PINS). NRIs can subscribe to Initial Public Offerings (IPOs) if they have a Non-Resident External (NRE)/Non-Resident Ordinary (NRO) account. You do not need a PINS account to invest in IPOs. NRIs can trade and invest in Indian equities but only on a delivery basis.

You can link either an NRE or an NRO bank account with your NRI demat account. You do not need to have a separate NRO account for trading and investment purposes as NRO (PINS) accounts are now designated as NRO accounts. However, you will need to link your NRI demat account to this NRO account.

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You need a special type of NRE bank account called an NRE (PINS) account to link to your NRI demat account. This account is separate from your regular NRE bank account and will solely be used for trading and investing in the secondary market. You can have only one NRE (PINS) account and can open it with a designated branch of a bank.

As per the Reserve Bank of India (RBI) regulations, NRIs cannot invest in certain industries of the Indian stock market such as railways, tobacco, etc. NRIs from the USA and Canada should contact their investment advisor for specific restrictions or investments in the Indian equity market.

 

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Overall investment by NRIs is limited to 10% of the paid-up capital of an Indian company. This can be increased to 24%* if the company's general body approves it through a special resolution.

*Section- II. 2(B), RBI regulations on Foreign Investment in India 

Click here to read more about NRIs investing in Indian stock markets.

You can trade in the Futures and Options (F&O) segment, but only through your NRO account, out of the rupee funds held in India, on a non-repatriable basis (subject to the limits prescribed by Securities and Exchange Board of India (SEBI) from time to time). You cannot use your NRE account to trade in the F&O segment.

You are restricted from trading in currency derivatives and commodities. Additionally, you are also restricted from engaging in intraday trading**, which involves buying and selling stocks on the same day without taking ownership.

You should contact your bank or broker for more information.

**As per the National Stock Exchange (NSE)

Open ICICI Direct NRI account

Mutual Funds (MF): You can explore equity, hybrid funds (balance of equity and debt) and debt mutual funds, like Fixed Maturity Plans (FMPs), liquid, ultra-short-term, short-term, and income funds based on your investment horizon. You can invest in MFs through either :

  • Lump sum investments; or
  • Regular contributions over a period of time through Systematic Investment Plans (SIPs).

You can also continue with your existing mutual fund SIPs. However, you will need to update your residency status and details of your NRE/NRO account with the Asset Management Company (AMC)/broker for any future investments/redemptions.

Please note, once your residential status changes to an NRI, you will need to do a fresh KYC altogether.

It is important to note that NRIs from the USA and Canada may face restrictions on investing in Indian mutual funds with a few AMCs which may not be Foreign Account Tax Compliance Act (FATCA) or Common Reporting Standard (CRS) compliant.  

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An individual designated as a mandate holder or Power of Attorney (PoA) is authorised to conduct investment activities on your behalf.

Fixed income and debt instruments

NRIs can invest in multiple fixed income instruments including Fixed Deposits (FDs), Government Securities (G-Secs), Public Sector Undertaking (PSU) and infrastructure bonds, corporate bonds and Non-Convertible Debentures (NCDs).

  • Fixed Deposits: NRIs can make Foreign Currency Non-Resident Bank (FCNR (B)) deposits that lets you maintain a fixed deposit in India in freely convertible foreign currencies for a tenure ranging from one to five years. NRIs can also open NRE/NRO fixed deposits using their NRE/NRO savings accounts respectively.

    For more details on NRE, NRO and FCNR(B) accounts, click here.

  • Government securities (G-secs) and related instruments: You can leverage RBI’s retail direct account to invest in multiple G-Sec instruments and State Development Loans (SDLs). You can also explore Bharat bonds which is an ETF focused on investing in the bonds of public sector companies.
  • PSU and infrastructure bonds: NRIs seeking stable returns and tax benefits can invest in PSU bonds and infrastructure bonds. PSU bonds are issued by companies in which the Indian government holds a majority stake g., National Thermal Power Corporation (NTPC), Power Finance Corporation (PFC), while infrastructure bonds e.g., National Highways Authority of India (NHAI), Infrastructure Finance Corporation of India (IFCI) are used to finance infrastructure projects.
  • Corporate bonds and NCDs: You can invest in corporate bonds and NCDs (debt instruments that cannot be converted into equity shares), issued by private sector companies (such as ICICI Bank).

NRIs can also invest in Public Provident Funds (PPF), National Savings Certificate (NSC) and National Pension System (NPS), with some restrictions. However, investments in RBI Bonds are prohibited for NRIs.

  • Public Provident Fund: As an NRI, you can continue to hold your existing investments and make fresh contributions till the period of maturity. However, you can neither open a new account, nor extend your existing PPF account.

    Click here to read more about PPF investments for NRIs.

  • National Pension Scheme (NPS): NRIs aged between 18 to 70 years can open a new NPS account and can invest in NPS. You can open or make fresh investments only in NPS Tier I and not in Tier II accounts.
  • National Saving Certificate (NSC) and Post Office schemes: NRIs are not permitted to initiate new investments in National Savings Certificates (NSCs) or other post office schemes, they can continue to hold and manage existing investments until their maturity dates. However, these accounts cannot be extended or further invested in beyond their maturity dates.

Real estate

NRIs are allowed to invest in residential and commercial properties in India, but are not permitted to invest in agricultural land, plantation properties, or farmhouses. You can also appoint a PoA to execute these transactions. Click here to know more on investing in real estate as an NRI.
 

Gold investments

You can invest in gold ETFs, gold mutual funds, digital gold, and physical gold. As per RBI and the prevailing Foreign Exchange Management Act (FEMA) guidelines, you are not allowed to make any new investments in Sovereign Gold Bonds (SGBs)*. However, if you had invested in SGBs as a resident Indian, you are permitted to hold them up to their maturity or opt for an early redemption. Click here to know more on investing in gold as an NRI.

*As per the Reserve Bank of India

Alternative Investment Funds

AIFs are investment funds that allows investors to invest in hedge funds, private equity, venture capital, and other categories. There are three categories of AIFs you can invest in***:

  • Category I: These funds invest in start-ups/early-stage ventures, Small and Medium Enterprises (SMEs), infrastructure, and other areas specified by SEBI.
  • Category II: These funds invest in equity, debt, and distressed assets.
  • Category III: These funds use high-risk trading strategies.

To invest in AIFs, NRIs should make a minimum investment of ₹1 crore. In case you are an investor who is an employee or director of the AIF or; manager, you can make an investment starting ₹25 lakh***. Please connect with your investment advisor or your bank for more details.

***As As per SEBI guidelines

 

Guidelines for investing in India as an NRI

Before you start investing in India as an NRI, you should comply with the prevailing FEMA guidelines including:

  • You should be classified as an NRI and have a Permanent Account Number (PAN) card.
  • To invest in stocks and convertible debentures, you will need to have a demat and trading account with a registered broker or bank under PINS.
  • For mutual funds, you can start investing with your NRE/NRO accounts either through your bank, broker, or AMCs.

You will also need an NRO or an NRE bank account to make investments. You can choose to invest in India either on a repatriable or non-repatriable basis.

  • If you invest through an NRE account, then the entire proceeds from investments are fully repatriable.
  • If you invest from your NRO account, then the proceeds are repatriable only up to USD 1 million cumulatively for all NRO accounts held in India per Financial Year (April-March).

Click here to know more about NRE/NRO accounts.
 

Taxation for NRIs

NRIs are taxed on their income earned in India based on the nature of instrument, holding period, tax treaty between India and their country of residence and the type of tax regime they have opted for.
You should consult a tax expert to understand the tax implications on different asset classes. To know more about the NRI income tax slabs, click here.

Conclusion

NRIs can invest in equities, fixed income investments, mutual funds, fixed deposits, real estate, gold investments, AIFs, and government backed securities. However, NRIs are not permitted to invest in SGBs, purchase agricultural land in India or carry out intra-day trading in the Indian stock market. You should get in touch with your bank or investment advisor for more details.

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Disclaimer:

The contents of this article/infographic are meant solely for informational purposes. The contents are generic in nature and are not intended to serve as a substitute for specific advice on any matter whatsoever. The information is subject to updation, completion and verification and the applicable norms may keep changing materially from time to time. This information is also not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to applicable laws or would subject ICICI Bank Limited/its affiliates to any licensing or registration requirements. ICICI Bank Limited/its affiliates and their representatives shall not be liable for any direct or indirect losses or liability incurred arising in connection with any decision taken by any person on the basis of this content. Please conduct your own due diligence and consult your financial advisor before making any decision. Terms and conditions of ICICI Bank and third parties apply. ICICI Bank is not responsible for third party services. Nothing contained herein shall constitute or be deemed to constitute an advice, invitation or solicitation to avail any products/services of third parties..