How NRIs Can Invest in India Under the 2026 Rules: A Practical Guide

For NRIs, the 2026 rule changes — per-company equity caps doubled to 10%, access extended to all individuals resident outside India, and a broadly investor-friendly policy tilt — have made this the most open India-investment regime in years. What has not changed is the sequence: accounts first, route second, taxes always.

This guide walks the stack in the order decisions actually arise, based on the rules as they stand in mid-July 2026.

Step 1: Which accounts do you need?

Everything begins with the banking layer, because it determines repatriability:

Account	Money it holds	Repatriation	Interest tax (India)
NRE	Foreign earnings remitted to India	Free (principal + interest)	Tax-free
NRO	India-sourced income (rent, dividends, old savings)	Up to USD 1 million/year with paperwork	30% TDS
FCNR(B) deposit	Foreign currency fixed deposits	Free	Tax-free

For mutual funds, NRE/NRO accounts plus NRI-updated KYC suffice. For direct stocks, add an NRI demat and trading account (routed through the Portfolio Investment Scheme where the bank requires it). Decide the NRE-versus-NRO question by asking where the money came from and whether you want it back out freely — mixing the two carelessly is the most common and most annoying NRI mistake to unwind.

Step 2: Which route fits which goal?

Mutual funds remain the lowest-friction route for most NRIs: no per-company caps to think about, SIPs automate the discipline, and the full fund toolkit applies unchanged. The caveat is jurisdictional — US/Canada residents face FATCA paperwork and fewer willing AMCs. Direct equities now come with the doubled 10% per-company headroom under the 2026 liberalisation — headroom that matters for concentrated family-office positions more than for diversified savers. Government securities are the quiet 2026 story: with the 10-year G-Sec near 6.76% and long bonds above 7.7%, sovereign paper offers NRE-routed investors clean, safe rupee income — see our bond market strategy piece. Real estate and deposits round out the menu, with FCNR deposits the currency-hedged sleeper option when the rupee is weak, as it is now near 96 per dollar.

Step 3: What will you actually keep after tax?

India taxes NRI capital gains at resident rates — 12.5% LTCG on equity above ₹1.25 lakh, 20% STCG — but collects via TDS at source, which means refunds require filing an Indian return. NRO interest suffers 30% TDS; NRE interest is Indian-tax-free. Then your resident country taxes the same income under its rules, with double-tax treaties (India has them with 90+ countries) letting you credit Indian tax paid. The practical order: confirm the treaty position for your country before choosing between NRE deposits, G-Secs and equity — post-tax rankings differ sharply between, say, the UAE (no personal income tax) and the US (worldwide taxation plus PFIC rules that punish Indian mutual funds).

The 2026-specific opportunities worth a look

Three doors opened this year. The equity-cap doubling mainly benefits concentrated investors, but the PROI extension lets foreign spouses and colleagues invest alongside you under one framework. The FPI G-Sec tax exemption doesn’t apply to individual NRI routes directly, but the same policy push built RBI Retail Direct into a genuine channel — ₹10,000 minimum, zero brokerage. And a weak rupee cuts your entry price in dollar terms; the rupee explainer covers both sides of that trade.

Rules and rates are as of mid-July 2026 and change with notifications and Budgets; NRI taxation is jurisdiction-specific, so verify treaty treatment with a qualified adviser before large commitments. This is educational content, not personalized advice.

Frequently asked questions

What accounts does an NRI need to start investing in India?

An NRE account (for repatriable foreign earnings) and/or an NRO account (for India-sourced income like rent), plus a demat and trading account flagged to NRI status. Mutual funds can be bought with just the bank accounts and updated KYC; direct stocks need the demat stack.

Can NRIs invest in Indian mutual funds?

Yes — most AMCs accept NRI investments from NRE/NRO accounts after NRI KYC, with no special cap. US- and Canada-based NRIs face extra FATCA-related paperwork and a shorter list of AMCs that accept them; check fund-house policy before starting SIPs.

How are NRI investments taxed in India?

Broadly like residents on rates — equity LTCG above ₹1.25 lakh at 12.5%, STCG at 20% — but with TDS deducted at source on gains and interest, and NRO interest taxed at 30% TDS. Double-tax treaties usually let you credit Indian tax in your resident country.

What changed for NRIs in 2026?

Three things: the per-company equity cap without SEBI registration doubled to 10% (aggregate 24%), the same access was extended to all individual persons resident outside India, and the RBI/government package made FPI income on G-Secs tax-free — signalling a broadly friendlier regime.

Sources

1. India Eases Foreign Investment Rules for Equity and G-Secs New Kerala checked 19 July 2026
2. Government Exempts Foreign Investors from Tax on G-Sec Earnings to Boost Capital Inflows The Pioneer checked 19 July 2026

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