Non-resident Indians (NRIs) haven’t gone big on the Indian stock market story despite the post-pandemic boom.
While domestic participation through mutual funds (MFs) and dematerialised accounts has soared, NRI participation figures show
limited signs of a similar rise.
The value of NRI assets under custody rose from Rs 3,486 crore in 2018–19 (FY19) to Rs 17,275.96 crore as of May 2025, according to the latest data from the Securities and Exchange Board of India’s monthly bulletin.
But this works out to less than 2 per cent of the Rs 14 trillion in NRI deposits with banks.
Industry participants suggest that the exposure may be higher, but data from other sources also show limited penetration relative to the growing domestic investor base.
The share of NRIs and other overseas investors in MF assets stood at 4.05 per cent in March 2025, lower than the 4.24 per cent seen in March 2019, according to the latest Association of Mutual Funds in India numbers.
A combination of local procedural hurdles for NRIs investing in India, as well as complications arising from overseas regulatory and tax regimes, has affected flows, according to experts.
Issues such as taxation and stricter know-your-customer requirements have played a role in keeping participation low, said Tanvi Kanchan, head of NRI business and strategy at Anand Rathi Share and Stock Brokers.
Non-residents have tax deducted at source in India, along with potential taxation in their home countries.
Many remain unaware of the procedures to avoid double taxation using treaty benefits.
Meanwhile, signing up for a broking account for the first time also involves documentation that may require notarisation from an embassy and a more cumbersome offline process than is seen for residents.
“For NRIs, you can’t have online onboarding,” she said.
Procedural issues involving local norms can also affect NRIs trying to open accounts, according to Jones George, executive
director at Geojit Financial Services.
For example, in West Asia, utility bills may be in the name of the owner rather than the tenant, making it difficult for NRIs to produce proof of address — an issue for which there is no easy workaround.
The requirement for a one-time password also affects NRIs who do not have an Indian mobile number.
They are required to set up a Portfolio Investment Scheme (PIS) account for stock market investments, but this can be challenging if their primary bank has not upgraded its systems.
“With large banks, it is seamless, but there are many banks (smaller, regional ones with NRI business where)… there are challenges,” he said.
Transaction costs also tend to be on the higher side for many PIS accounts, he added.
“There are people from the US who want to invest, but because of various problems, they are not able to,” said Suresh Sadagopan, founder of Ladder7 Financial Advisories.
The US government requires cumbersome tax reporting procedures under the Foreign Account Tax Compliance Act, which has caused many MFs to stop accepting NRI money from the US and Canada.
Some jurisdictions also tax unrealised gains, which can further complicate tax matters, said Sadagopan.
Domestic participation has driven MF assets from Rs 23.8 trillion in FY19 to Rs 74.4 trillion as of June 2025.
The number of demat accounts has increased from 35.9 million in March 2019 to nearly 200 million as of June 2025.
Overseas Indians sent home remittances of over $135 billion (over Rs 11 trillion) in 2024–25.
