Can NRIs invest in Indian stock markets?

Yes, NRIs (Non-Resident Indians) can invest in the Indian stock markets, but there are specific regulations and procedures they need to follow. Here’s a brief overview:

1. Portfolio Investment Scheme (PIS): NRIs must invest in Indian stocks through the Portfolio Investment Scheme (PIS) of the Reserve Bank of India (RBI). This scheme allows NRIs to buy and sell shares and convertible debentures of Indian companies on recognized stock exchanges in India.

2. NRI Account Requirements: NRIs need to open an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account with a bank in India to facilitate their investments. Transactions related to investments in stock markets are routed through these accounts.

3. Demat and Trading Account: NRIs must open a Demat account and a trading account with a registered brokerage firm in India. The Demat account holds the securities in electronic form, while the trading account facilitates buying and selling.

4. Investment Restrictions: NRIs can invest in shares of listed Indian companies and mutual funds but are subject to certain restrictions:

   • NRIs cannot engage in intraday trading (buying and selling on the same day).
   • There are limits on the percentage of shares they can hold in a particular company.

5. Taxation: NRIs are subject to capital gains tax on profits made from their investments in Indian stock markets. The tax rates vary based on whether the gains are short-term or long-term.

6. Repatriation of Funds: NRIs can repatriate funds from their investments subject to compliance with foreign exchange regulations and taxes.