Can an NRI Invest in Indian Stock Market?

Hi, NRIs are restricted from investing in certain sensitive sectors like defense or real estate and cannot participate in currency or commodity derivatives. So, can NRI invest in Indian stock market? Yes, Non-Resident Indians (NRIs) are fully permitted to invest in the Indian stock market, but under specific RBI and SEBI regulations.

How can NRI Invest in Indian Stock Market?

1. To begin, NRIs must open an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) bank account.

2. When investing in equities, they also need a Portfolio Investment Scheme (PIS) approval this allows NRIs to use foreign or Indian funds and is mandatory for investments on a repatriable basis, although some recent relaxations under FEMA may simplify procedures so it’s essential to check with your broker for current requirements.

3. After obtaining PIS, you can set up an NRI Demat and trading account with a SEBI-registered broker to buy listed equity shares only delivery-based trades (where securities are held for more than one day) are permitted, meaning activities like intraday trading are strictly prohibited.

4. Additionally, there are holding limits: an NRI’s investment in a listed company is capped at 5% of its paid-up capital, and collectively, NRI holdings cannot exceed 10% though this aggregate limit may be increased to 24% if approved via a company resolution.

NRIs can also invest in mutual funds, ETFs, IPOs, government bonds, and other regulated instruments through their NRE/NRO accounts, subject to tax and repatriation norms.

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Yes, Non-Resident Indians (NRIs) can invest in the Indian stock market under the guidelines of the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). But this raises the question: How can NRI invest in Indian stock market? NRIs can invest in stocks via a PIS account with an authorised bank, allowing them to trade in listed securities on a repatriation or non-repatriation basis.

Can NRI Invest in Indian Stocks?

Some key aspects of NRI invest in Indian stocks:

1. NRIs can buy shares in Indian companies through recognised stock exchanges but cannot engage in intraday trading or short selling.

2. NRIs can invest in Indian mutual funds without a PIS account, subject to Foreign Exchange Management Act (FEMA) regulations.

3. NRIs can trade in futures and options but with restrictions, including margin requirements and custodial arrangements.

4. NRIs need an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) bank account to invest in stocks.

5. Capital gains tax for NRI applies to stock market investments, with rates depending on the holding period. The Double Taxation Avoidance Agreement (DTAA) can help reduce tax liabilities. NRIs cannot invest in certain stocks or sectors restricted under FDI norms.

Hope this helps!

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