An NRI (Non-Resident Indian) can invest and trade in the Indian stock market; however, the process differs slightly from that of a resident Indian, primarily due to FEMA (Foreign Exchange Management Act) regulations. NRI Trading in India.
1. Open an NRI Bank Account
You need an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account with an Indian bank.
- NRE Account: For funds earned abroad, this account is fully repatriable, enabling you to remit money back to the country of origin.
- NRO Account: For income earned in India (rent, dividends, etc.), repatriation is restricted.
2. Obtain PIS Permission
NRIs need Portfolio Investment Scheme (PIS) permission from the RBI.
- Apply for PIS through an authorised Indian bank.
- PIS allows NRIs to invest in the Indian stock markets via a designated account.
- Some brokers now offer Non-PIS accounts for ease, especially for Equity F&O trading.
3. Open Demat and Trading Account
With PIS permission in hand:
- Open a Demat Account with a depository participant (NSDL or CDSL).
- Open a Trading Account with a SEBI-registered stockbroker that offers NRI services.
- Both accounts must be linked to your NRE/NRO bank account.
4. Investment Options for NRIs
NRIs can invest in:
- Equity Shares (Delivery-based only, intraday equity trading is not allowed).
- Equity Derivatives (F&O) — allowed through NRO accounts with some brokers.
- Mutual Funds.
- IPOs.
- Government securities & bonds.
Important Notes:
- Intraday Trading: Not allowed for NRIs in the equity segment.
- F&O Trading: Allowed only via an NRO account with a custodial participant setup.
- Taxes: Subject to TDS (Tax Deducted at Source) on capital gains.
- Profits are repatriable for NRE accounts but restricted for NRO.
