How Can NRI Invest in the Indian Stock Market?

Last Updated: 18 Aug 2025

If you are an NRI and want to select the best investment avenues in India, then stocks may be the right thing for you. Indian stock markets have the third largest investor base globally—after the USA and Japan. The Foreign Exchange Management Act (FEMA) has stipulated several rules for NRIs to invest in Indian stock markets via the Portfolio Investment Scheme (PIS) which is regulated by The RBI.

Who is an NRI?

To fall under the NRI category, you have to be a Person of Indian Origin (PIO), or an Indian citizen living abroad. Your stay in India should be more than 60 days, but less than 182 days in a given financial year. Subject to fulfilling this, even if your stay in India is 365 days, or more, in the previous four financial years, you will still be regarded as an NRI. You can also have NRI status, if you are deputed to a foreign country for more than six months.

Can NRIs Invest in Indian Stock Markets?

NRIs are allowed to invest in the Indian stock market through portfolio investment schemes (PIS). An NRI investment India also requires opening a PIS account with a designated bank and can invest in shares of Indian companies.

How NRIs Can Start Investing in the Indian Stock Market

As an NRI, you can invest in the Indian stock market by following a structured process, which mandates you to comply with the RBI’s and SEBI’s guidelines. Here is how you can begin your investment journey:

By Opening an NRI Bank Account

The first step is to open an NRI bank account. There are two primary types of accounts, one is NRE and the other is NRO. An NRE account allows you to get full repatriation of funds, including principal and interest. In contrast, an NRO account is used for income earned through dividends.

Through Portfolio Investment Schemes ( PIS )

PIS schemes allow you to buy and sell shares in Indian companies through recognised stock exchanges. To enrol for this, you have to apply for PIS permission through designated RBI authorised banks.
These schemes ensure compliance with foreign capital limits and help to route funds transparently in NRI stock market investments.

By opening a Demat and Trading Account

Once your NRI bank and PIS accounts are ready, you can open a demat and trading account with a SEBI-registered stockbroker. This demat account digitally holds securities, while your NRI trading account will be used to buy and sell shares.

What is the difference between NRE and NRO Accounts? Do NRIs need both accounts to invest in the stock markets?

A key difference between NRE and NRO Accounts is that the latter does not allow free repatriability. An NRO Account is best suited for NRIs having sources of income in India. The government has mandated opening an NRO Account, as depositing money earned in India would result in a tax-free transfer of money outside the country.

According to recent government regulations, you don’t require a Non-Resident Ordinary (NRO) Account for investing in stock markets through the PIS because any investment made through an NRO Account will be regarded as an investment by a resident Indian.

Steps to be followed after opening an NRE Account

To invest in the Indian stock markets, you need to follow the steps below:

• While opening the PIS Account, you have to provide the name of your SEBI-registered broker.
• The bank will issue a PIS permission letter, which has to be forwarded to the broker.
• Now, you can open Demat Account and a Trading Account with the broker.

Importance of PIS Account

Just like a bank account for resident Indians, the PIS Account holds the investment amount of NRIs and is linked with the Demat Account and Trading Account.

Additional facts an NRI Investor needs to know:

• NRIs cannot engage in intraday trading in stock markets; they can only trade on a delivery basis in stock markets.
• An NRI can acquire shares and convertible debentures of Indian companies via the stock exchanges, but there is a ceiling for overall investment.
• An NRI is also barred from investing in some stocks and sectors, as per an RBI mandate.

Conclusion:

Thus, as an NRI, you can invest in the Indian stock markets through the RBI-regulated platform of PIS. Before investing in the Indian stock markets, opening an NRI trading account with a trusted financial partner is very important. IIFL’s award-winning NRI financial advisory services provide you with a wide range of investment options along with dedicated relationship managers and a hassle-free online account opening process.

Frequently Asked Questions

1. How can NRIs invest in the Indian share market?

As an NRI, you can invest directly in the Indian stock markets through PIS. You need to open a specific bank and trading account to do so.

2. What accounts do NRIs need to begin investing in India?

You should open an NRE/ NRO bank account, a PIS account and a Demat and trading account with an SEBI-registered broker. Through these accounts, you can purchase and sell shares using registered stock brokers.

3. Can NRIs invest in mutual funds or IPOs of India?

Yes, you are allowed to invest in mutual funds and acquire shares in IPOs using your NRE/NRO account. But there are certain requirements to be followed as per SEBI and the mutual fund platform.

4. What is the difference between NRE and NRO accounts for stock investment?

NRE accounts allow you to repatriate funds abroad and hold foreign earnings. While NRO accounts are used for managing income earned in India, with limited repatriation.

5. How can NRIs open a trading and Demat account in India?

You have to provide photocopies of your passport, a document to show an address in an overseas country, and a PAN card to the SEBI-registered broker to open a trading and demat account. Many brokers also provide you with specialised NRI services to make this process easier.