How NRIs Invest in India in 2026: Routes, Tax and Money Flows
How NRIs invest in India in 2026: deposits, PIS shares, mutual funds, bonds, property and GIFT City, with tax rates, new limits and RBI flow data.
Key takeaways
- Bank deposits dominate NRI investment in India, with $169.27 billion outstanding at end-2025, about $100.8 billion of it in NRE accounts.
- FCNR(B) inflows swung from $0.91 billion in April 2025 to February 2026 to $36.7 billion in seven weeks of the 2026 swap window, showing currency risk drives NRI flows.
- For a non-resident, NRE interest is tax-free, long-term listed equity gains face 12.5 percent above Rs 1.25 lakh, and debt funds and NRO deposits are taxed at full rates.
Between April 2025 and February 2026, non-resident Indians put just $0.91 billion of fresh money into FCNR(B) foreign currency deposits, according to RBI data. Then, in the seven weeks from 8 June to 31 July 2026, they put in $36.7 billion. Nothing about the account changed except its price. The swing is the clearest evidence there is that NRI money is not loyal to any one route into India. It goes where the after-tax, after-currency return is best, and the routes differ far more on those two counts than on headline rates.
This guide maps the main ways NRIs and OCI holders invest in India in 2026, what each costs in tax, and what the latest data says about where the money is actually going. It is neutral by design: no product picks, and nothing here is investment advice. Returns, taxes and currency risk depend on your situation, so talk to a qualified adviser before committing money.
Where NRI money sits today
Bank deposits remain the largest pool. At the end of December 2025, NRI deposits outstanding stood at $169.27 billion, Business Standard reported from RBI data: $100.79 billion in NRE accounts, $34.85 billion in FCNR(B) and $33.63 billion in NRO. In April to December 2025, inflows fell 16 percent to $11.20 billion, entirely because FCNR(B) inflows collapsed from $6.46 billion to $2.04 billion while NRE and NRO inflows rose. By February 2026, fiscal-year inflows were down 24 percent on the year.
Then the rupee broke down. It hit a record 96.25 to the dollar on 18 May 2026 as Brent crude topped $111. The RBI responded in June with a concessional swap facility for banks raising fresh three to five year FCNR(B) deposits. Its own tally showed $36.7 billion of FCNR(B) money by 31 July. A deposit that removes currency risk, paying a better rate, beat everything else on offer.
The routes, side by side
The table compares the main routes on what funds them, whether the money can go back abroad, and how India taxes the return for a non-resident. Tax figures are drawn from 2026 withholding summaries and Budget 2026 commentary.
| Route | Funded from | Repatriable? | Indian tax on returns (non-resident) |
|---|---|---|---|
| NRE deposit | Foreign earnings | Yes, fully | Interest exempt |
| FCNR(B) deposit | Foreign earnings, in foreign currency | Yes, fully | Interest exempt |
| NRO deposit | Indian income | Up to USD 1M a year of capital | Interest taxed; 31.2% TDS by default |
| Listed shares (repatriable) | NRE or remittances | Yes | 12.5% long-term above Rs 1.25 lakh; 20% short-term; dividends 20% TDS |
| Equity mutual funds | NRE or NRO | Depends on funding account | Same rates as listed equity |
| Debt mutual funds (bought from April 2023) | NRE or NRO | Depends on funding account | Slab rates; 30% TDS |
| Corporate bonds | NRE, NRO or remittances | Depends on funding | Interest TDS 20% if bought in foreign exchange, else 30% |
| Residential property | Any NRI account | Two NRE-funded homes outside the NRO cap | Long-term gains 12.5%, no indexation |
Surcharge and a 4 percent cess sit on top of these rates. Your country of residence may also tax the same income, with credit for Indian tax under a treaty. The table's key column is the second one: the account that funds an investment fixes whether the proceeds can leave. Our NRE, NRO and FCNR guide explains why.
Source RBI data via Business Standard, Angel One; RBI press release
Deposits: still the default, for good reasons
The appeal of NRE and FCNR(B) deposits is simplicity. The interest is exempt in India, there is no market risk, and the money can go back abroad at any time. The trade-off is currency. An NRE deposit is in rupees, so a 6 or 7 percent rupee return can be erased in dollar terms by a bad year for the currency, as 2026 showed. FCNR(B) removes that risk but is term-only, from one to five years, and in normal times pays rates tied to dollar or pound benchmarks rather than Indian ones.
NRO deposits make sense mainly for money that is already in India, such as rent or sale proceeds. Their interest is taxed, and the default withholding of 31.2 percent is high for most people. A tax treaty rate, with the right paperwork, can cut that.
One more deposit detail is often missed. An NRE deposit can be pledged for a loan in India without limit, subject to the bank's margin, but the loan itself cannot be sent abroad, and the deposit cannot be broken early while the loan is outstanding. For families who want liquidity in India without giving up the tax-free status of their savings, that is a useful option. It is also a reminder that the rules on these accounts are set by the RBI's deposit regulations, not by individual banks, so the core terms do not vary much between lenders.
Shares and mutual funds
An NRI can buy listed Indian shares directly, on a repatriable basis through an account designated for the RBI's portfolio investment scheme, or on a non-repatriable basis from NRO funds. Mutual funds can be bought from either NRE or NRO money, and repatriability follows the source. Some fund houses limit investment by residents of the US and Canada because of reporting rules in those countries, so the route open to an NRI in Houston can be narrower than for one in Dubai.
Two 2026 changes matter. First, from tax year 2026-27, the ceiling on a single non-resident investor's holding in one listed company rises from 5 percent to 10 percent, and the combined limit for all such investors from 10 percent to 24 percent. Second, securities transaction tax on derivatives went up: options premium from 0.10 to 0.15 percent and futures from 0.02 to 0.05 percent. For long-term investors in cash equities, the first change is mostly irrelevant and the second does not apply. For NRIs who trade futures and options, costs rose meaningfully.
The account you fund an investment from decides more about your return than the investment you pick.
A worked example: Rs 10 lakh, four wrappers
Consider an NRI in Singapore with Rs 10 lakh to invest for a year. The returns below are illustrative assumptions; the tax treatment is as published for a non-resident, before surcharge.
- NRE fixed deposit at an assumed 6.5 percent: Rs 65,000 of interest, no Indian tax. Net Rs 65,000.
- NRO fixed deposit at an assumed 7 percent: Rs 70,000 of interest, 31.2 percent withheld, or Rs 21,840. Net Rs 48,160 unless a treaty rate is claimed.
- Equity fund held just over a year, assumed gain of Rs 1.5 lakh: 12.5 percent on the Rs 25,000 above the Rs 1.25 lakh exemption is Rs 3,125, plus cess. Net about Rs 1.47 lakh, but with real risk of a loss instead.
- Debt fund bought after April 2023, assumed gain of Rs 70,000: taxed at slab rates, with 30 percent TDS of Rs 21,000 plus cess. Net under Rs 49,000, similar to the NRO deposit.
The pattern is stark. Since the 2023 change, debt funds have lost their tax edge for non-residents and look much like a taxed deposit. NRE deposits win on certainty and tax. Equity wins only if you accept volatility, and in all four cases the result in Singapore dollars depends on what the rupee does over the year.
Property and GIFT City
Property remains a large emotional and financial destination for NRI money, but its rules are the strictest. NRIs and OCI holders can buy residential and commercial property, not agricultural land. On sale, the buyer withholds tax at 12.5 percent plus surcharge and cess on long-term gains, generally on the full price unless the seller gets a lower deduction certificate. From 1 October 2026 a resident buyer can deduct that TDS using a PAN instead of a TAN, which removes one practical obstacle. The FEMA side is covered in our FEMA rules for NRIs guide.
GIFT City's International Financial Services Centre offers a different proposition: foreign currency deposits and funds held in India but outside the domestic currency regime. Interest on certain IFSC bank deposits is described in industry guidance as exempt for non-residents. The IFSC is still small next to the NRE and FCNR(B) pools, and anyone considering it should confirm the tax position for their specific product.
What the data tells you
Three conclusions stand out. First, NRI money responds to currency risk more than to rates: FCNR(B) inflows collapsed in 2025 when the rupee looked stable and exploded in 2026 when it did not. Second, the NRE pool, at roughly $100 billion, is the bedrock, built from steady salary savings rather than opportunistic flows. Third, the tax system increasingly favours simple routes: deposits are exempt, equity is taxed lightly on long holdings, and debt funds and NRO deposits are taxed at full rates. For the tax mechanics on money already in India, see tax on money sent to India; for the cost of getting it there, see the cost of sending money home.
What to watch next
- 30 September 2026: scheduled close of the RBI's FCNR(B) swap window and of the temporary removal of rate ceilings on long-dated FCNR(B) and NRE deposits. If it closes early or is extended, rates on new deposits will move.
- 1 October 2026: PAN-based TDS for resident buyers of NRI property comes into force.
- Tax year 2026-27: the higher 10 percent and 24 percent listed-company limits for non-resident investors apply.
- Monthly RBI NRI deposit data: the August and September figures will show how much of the swap-window money was new and how much was switched from NRE accounts.
This article is general information about investment routes and tax rules, not investment, tax or legal advice. It does not recommend any product, bank or fund. Confirm your eligibility, tax position and currency exposure with a qualified adviser. If you plan to return to India, our moving back checklist explains what happens to each holding.
Frequently asked questions
Can NRIs invest in Indian mutual funds in 2026?
Yes, from NRE or NRO accounts, with repatriability following the source of funds. Some fund houses restrict investors resident in the US and Canada because of those countries' reporting rules.
What tax does an NRI pay on equity mutual fund gains in India?
Long-term gains on listed equity and equity funds are taxed at 12.5 percent above Rs 1.25 lakh a year, and short-term gains at 20 percent, plus surcharge and cess. Treaty relief and home-country tax depend on where you live.
How much of a listed Indian company can an NRI own after Budget 2026?
From tax year 2026-27, a single non-resident investor can hold up to 10 percent of a listed company, up from 5 percent, and all such investors together up to 24 percent, up from 10 percent.
Why did NRIs move money into FCNR deposits in 2026?
The rupee fell to a record 96.25 per dollar in May 2026, and the RBI's June swap facility let banks offer better rates on three to five year FCNR(B) deposits, which carry no rupee risk. Banks raised $36.7 billion through the window by 31 July.
Sources and further reading
- Business Standard: NRI deposit flows fall 16% to $11.2 bn in Apr-Dec 2025
- Angel One: NRI deposit inflows down 24% in April-February 2026
- RBI: FCNR(B), ECB and OFCB inflows under swap facility, 1 August 2026
- Deccan Herald: Rupee falls to record low of 96.25
- NRI Information: TDS for NRIs 2026 reference
- NRI Information: India's 2026 Budget and what it changes for NRIs
- Kotak: TDS on NRI FDs
- Belong: Are NRE accounts tax-free? 2026 guide
- RBI Master Direction: Deposits and Accounts
This article is for general information and is not financial, legal or tax advice. Figures are as reported by the sources above at the time of writing.
