Can NRIs Invest in Mutual Funds in India?

If you earn abroad and want your savings working in India, mutual funds are usually the simplest place to start.

There is no separate "NRI mutual fund". You buy the ordinary schemes, through an NRI-designated account and after a one-time setup.

Please note. This is general information, not personal advice. Rules can change and depend on your own situation and country of residence. Confirm your position before acting.

Are NRIs allowed to invest?

Yes. NRIs are permitted to invest in Indian mutual funds under FEMA, the Foreign Exchange Management Act.

The investment has to be in rupees, routed through an NRI bank account, and the fund house has to have completed your KYC. Direct investment in foreign currency is not allowed.

What you need to start

• An NRE or NRO account. Your rupee account in India. This is where the money comes from and where redemptions are paid.
• A PAN. Your Indian tax identification number. It is mandatory for investing and for the tax that follows.
• NRI KYC. A one-time verification with proof of identity, your overseas address, and your passport and visa or residence permit.

Once these are in place, investing works much as it does for a resident, through a platform, an app, or directly with the fund house.

NRE or NRO: which account should you use?

The account you invest from decides whether the money can leave India freely later.

• Invest from an NRE account and the investment is treated as repatriable. Both the amount you put in and the proceeds can be sent back abroad.
• Invest from an NRO account and the investment is non-repatriable by default, and moving the proceeds abroad is subject to the usual NRO limit and paperwork.

If you may want the money back outside India one day, the NRE route keeps that option open. We cover the mechanics in our guide on how much an NRI can repatriate from India.

If you live in the US or Canada

You can still invest, but your choice of fund house is narrower.

Because of reporting rules such as FATCA, many Indian fund houses do not accept investments from US and Canada based NRIs, and some of those that do ask for the transaction to be submitted in a specific way. It is worth confirming acceptance before you begin, rather than after.

How should an NRI choose funds?

Start with the job the money has to do, not with a list of "top" funds.

A goal a few years away calls for a different kind of fund than money you will not touch for fifteen years. Cost, how consistent the strategy is, and how the holding fits the rest of your portfolio matter more than last year's return, which does not indicate future returns.

If you are weighing a monthly plan against a one-off investment, our SIP calculator and the guide on SIP vs lumpsum for NRIs are a useful starting point.

What about tax?

Gains on Indian mutual funds are taxable in India, and for NRIs the fund house deducts tax at source when you redeem.

The rates changed in 2024, and a treaty such as the India-UAE agreement may reduce what you finally pay. The detail is in our guide on capital gains tax for NRIs on mutual funds.

How RuDo helps

RuDo is a fee-only, cross-border adviser for NRIs, regulated by the FSRA in ADGM and by SEBI in India.

Buying a fund is the easy part. The harder question is which funds, in which account, for which goal, and how they sit alongside whatever you hold outside India. That is the plan we build with you.

If you already hold Indian funds, you can link them by PAN through MF Central in the RuDo app to see everything in one place, or book a wealth review for a clear next step.