NRI Trading on Indian Stock Exchanges

Being an NRI, investing or trading on Indian stock exchanges can be quite a common sight and can prove to be exceptionally rewarding. To begin with, the identification of an NRI can be quite complex. According to FEMA guidelines, a person who has been in India for 182 days during a financial year is not considered an NRI. In addition, a person who has been in India for 365 days over the past 4 years and at least 60 days in the current year is also not considered an NRI. NRI trading has become increasingly popular over the years.

However, the rules change for NRIs when it comes to Indian stock exchanges compared to resident Indians. NRIs typically face several roadblocks in the Indian market. This article explains everything you need to know about how to trade on Indian stock exchanges as an NRI.

How to get started

To begin your trading journey on the Indian stock exchanges, you will have to begin with these 4 factors.

  1. Open an NRE or NRO savings account in India

It is essential that you begin with opening an NRE(Non-Resident External Rupee), NRO(Non-Resident Ordinary Rupee), or FCNR(Foreign Currency Non-Residential) savings account in India. Usually, many go ahead with opening an NRE savings account over an NRO savings account. In simple terms, an NRE account is a rupee account. With this savings account, you can send money back to the country of your residence.

When it comes to an NRO account, it is essential to remember that it is non-repatriable. Whereas, an FCNR account is very much similar to an NRO account except that the funds will be held in foreign currencies. The capital that you are willing to use to trade can either be directly debited from your bank account or can be made through cheques or drafts. In case of direct debit from your bank account, no further documentation is required. In case of a cheque or a draft, you will be required to submit a FIRC (Foreign Inward Remittance Certificate) or a letter that is typically issued by the bank which confirms the source of your funds.

  1. Get RBI approval

Once you set up your savings account in India, the next step is to get a permission letter from the Reserve Bank of India (RBI). Ensure to get this done before you go ahead with opening your trading and Demat accounts.

  1. Get the PIS letter

The Portfolio Investment Scheme (PIS) letter has to be procured from the RBI. This would typically be facilitated by the bank that holds your NRE/NRO/FCNR savings account.

  1. Open a Demat account and a Trading account

Finally, it is important for you to open a Demat account and a trading account for NRI in India. You can do this with any brokerage that suits your needs best. While applying for these accounts, you will be asked to submit your documents along with the PIS letter provided to you by your bank.

As you have the option to open both an NRE and an NRO account, it is important for you to specify which bank account is to be linked to your trading account. If you map your NRE account to your trading account, you will be eligible to trade in the equity segment. However, if you choose to map your NRO account, you can trade in both equity and derivative segments.

Documents required to open a Trading and Demat Account as an NRI

An NRI trading account begins with gathering the required documentation. While you open your NRI trading account and a Demat account, you will be asked to submit the following list of documents.

– Copy of your PAN Card

– Copy of PIS Letter

– Copy of FEMA Declaration

– FATCA Declaration Form

– Passport-sized photograph

– Overseas address proof such as utility bills, driver’s license, passport, etc.

– Indian address proof (if available)

– Proof of bank account

– Declaration of P.O.Box in your country of residence

– In case of an Indian passport: Copy of Passport and Copy of Visa

– In case of a Foreign passport: Copy of passport, Copy of PIO card

What is the trading process for NRIs?

The trading process for NRIs varies on certain metrics compared to the trading process of an Indian resident. Here are the steps that the trading process for an NRI typically involves.

1. First, you will be required to allocate the required funds from your NRE/NRO/FCNR savings account to your PIS.

2. Then, once the bank updates these funds into your NRI trading account, you can make a purchase of any stock. The stockbroker would send the bank a contract at the end of the trading day. The bank would further debit your PIS account.

3. In case you sell a certain stock, your brokerage will send a contract note to your bank who will then credit your PIS account from the profits gained from the shares.

How to trade on derivatives?  

In order to trade futures and options, you will need to ensure to link your NRO (Non-Resident External Rupee) account to your trading account. The NRO account is non-repatriable and can enable you to trade on derivatives. In addition, to trade futures and options as an NRI, you would be required to get a CP (Custodial Participant) code. Stockbrokers typically partner with different agencies to facilitate and assign the CP code.

Tax liabilities  

One of the key distinguishing factors between an Indian resident and an NRI investing or trading in the Indian stock exchange is the tax liability difference. For an NRI investor, the tax is deducted at the source. However, many wonder if NRIs are bound to experience double taxation: first being taxed in India followed by being taxed at their country of residence. This entirely depends on the NRI’s country of residence. In case the Indian government has an ADTT (Avoidance of Double Taxation Treaty) with the NRI’s resident country, then the NRI would not have to pay their taxes twice.


NRIs can trade on the Indian stock exchange with an NRI trading account to leverage the great difference in conversion rates. However, the process can be slightly tedious involving quite a bit of paperwork to be completed. With a few simple steps followed in a timely and organized fashion, you can begin your trading journey in the Indian stock exchange as an NRI within a short span of time. Angel One can help you open an NRI trading and Demat account hassle-free with minimal documentation.