Yes — Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) can apply for Indian IPOs, subject to the issuing company allowing NRI participation and FEMA / RBI regulations on holdings. Most Mainboard IPOs explicitly include NRI / OCI quotas, and SME IPOs increasingly do as well. The mechanics are slightly different from resident retail investors — different account types, repatriation choices, and a tax framework that changed materially in 2024. This guide covers everything an NRI needs to know.
Can NRIs Invest in Indian IPOs?
Yes. NRIs and OCIs are permitted to apply for Indian IPOs under the NRI category (a sub-segment within the broader Non-Institutional Investor / NII category in book-built issues, or via specific reservations in some IPOs). Two important conditions apply:
- The issuer must allow NRI participation — disclosed in the Red Herring Prospectus (RHP). Almost all Mainboard issues do; some SME issues exclude NRIs.
- FEMA holding limits apply — a single NRI cannot hold more than 5% of the post-issue paid-up capital of the company; aggregate NRI / OCI holding cannot exceed 10% of paid-up capital (can be increased to 24% if the company passes a special resolution).
NRE vs NRO — Which Account to Use?
The choice of bank account determines whether your investment is on a repatriable or non-repatriable basis:
| Aspect | NRE Account | NRO Account |
|---|---|---|
| Full name | Non-Resident External | Non-Resident Ordinary |
| Source of funds | Foreign earnings transferred from abroad | Indian earnings (rent, pension, IPO proceeds, dividends) |
| Repatriation | Fully repatriable (principal + interest, no upper limit) | Up to USD 1 million per financial year, after taxes, with Form 15CA / 15CB |
| IPO investment basis | Repatriable basis — sale proceeds can be sent back to your foreign country | Non-repatriable basis (NRO route) — proceeds stay in India unless within USD 1M/year limit |
| Best for | NRIs who want to eventually move proceeds back to country of residence | NRIs maintaining Indian financial life or already-Indian funds |
Do NRIs Need a PIS Account for IPOs?
No — PIS is not required for IPO applications. The Portfolio Investment Scheme (PIS) is an RBI-approved framework that NRIs need for secondary-market trading of Indian shares on a repatriable basis. For IPO applications, NRIs can use a non-PIS NRE or NRO account directly.
However, PIS becomes relevant after listing — if you want to sell your allotted shares in the secondary market on a repatriable basis, the shares need to sit in a PIS-linked NRE demat account. Many NRI investors set up a PIS account in advance to keep their post-listing options flexible.
Step-by-Step IPO Application Process for NRIs
- Open an NRE or NRO bank account with an Indian bank that supports IPO ASBA for NRIs (most major banks do — HDFC, ICICI, SBI, Axis, Kotak).
- Open an NRI demat account with a SEBI-registered broker that supports NRI clients (Zerodha, ICICI Direct, HDFC Securities, Kotak Securities, etc.).
- Link your NRE / NRO bank account to your demat account. Ensure the bank account's PAN matches your demat account's PAN.
- Choose the IPO — confirm via the RHP that the issue allows NRI participation. Most Mainboard issues do.
- Apply through ASBA via your bank's net banking portal (most reliable for NRIs) or UPI if your broker and bank support UPI for NRI accounts (less commonly available — verify with your broker first).
- Funds are blocked in your NRE / NRO account until allotment. If you don't get shares, the block is released automatically.
- On allotment, shares are credited to your NRE-linked or NRO-linked demat account based on which bank account funded the application.
UPI vs ASBA for NRIs
For NRIs, the choice between UPI and ASBA depends entirely on your bank's NRI-UPI support:
- ASBA (recommended for NRIs) — Universal: every NRI bank account supports ASBA via net banking. Reliable. Best for first-time NRI applicants.
- UPI for NRIs — Available only if (a) your bank issues a UPI ID linked to your NRE / NRO account, (b) your UPI app supports the international mobile number you registered with, and (c) your broker app supports NRI UPI. Many banks still do not extend UPI to all NRI accounts. Verify with your bank first.
See our full ASBA vs UPI guide for the underlying mechanism — both work on a "blocked amount" principle, identical for NRIs and residents.
FEMA Holding Limits — What NRIs Need to Know
The Foreign Exchange Management Act (FEMA) caps NRI holdings to prevent foreign-control concerns:
- Per individual NRI: Maximum 5% of post-issue paid-up capital of any single company.
- Aggregate NRI / OCI cap: All NRIs and OCIs combined cannot hold more than 10% of a company's paid-up capital. Companies can raise this to 24% by passing a special resolution; some sectors have lower caps based on sectoral FDI rules.
- Sectoral restrictions: Certain sectors (defence, atomic energy, certain telecom segments) restrict or prohibit NRI investment beyond defined limits. Always check the RHP risk factors for sector-specific FEMA / FDI restrictions.
Tax on NRI IPO Investments (Updated Post-Budget 2024)
The Indian capital gains tax framework changed materially with effect from July 23, 2024, and continues to apply in 2026. Key rates that NRIs need to know for listed-equity capital gains:
| Holding Period | Tax Type | Rate (post-July 23, 2024) | Exemption |
|---|---|---|---|
| Less than 12 months | Short-Term Capital Gains (STCG) | 20% + applicable surcharge and cess (was 15%) | None |
| 12 months or more | Long-Term Capital Gains (LTCG) | 12.5% + applicable surcharge and cess (was 10%, indexation removed) | First Rs 1.25 lakh of LTCG per financial year is exempt |
TDS (Tax Deducted at Source) applies to NRIs at the same rates — 20% on STCG, 12.5% on LTCG above Rs 1.25 lakh. Your broker / depository participant typically handles TDS deduction at the time of sale.
DTAA (Double Taxation Avoidance Agreement) — India has DTAAs with most major countries (USA, UK, UAE, Canada, Australia, Singapore, etc.). Depending on your country of residence, you may be able to claim relief on Indian-sourced capital gains. Consult a CA familiar with NRI taxation for your specific DTAA position. NRIs may also apply for a Lower Deduction Certificate (Form 13 under Section 197) if their actual tax liability is lower than the standard TDS rate.
Repatriation — Moving Proceeds Out of India
Whether you can send your IPO proceeds back to your country of residence depends on which account you used to apply:
- NRE-funded application: Sale proceeds (post-listing) credited back to your NRE account are fully repatriable. No documentation beyond a request letter and Form A2 needed.
- NRO-funded application: Sale proceeds go to your NRO account. To repatriate, you need Form 15CA (declaration of taxes paid) and Form 15CB (Chartered Accountant certificate). Annual repatriation limit: USD 1 million per financial year after taxes are paid.
Documents Required
- PAN card (Indian PAN, mandatory for all financial transactions)
- Passport copy (with valid visa pages for NRI status proof)
- OCI / PIO card (if applicable)
- Overseas address proof (utility bill, driver's license, residence permit)
- FEMA declaration (Form A2) — submitted at time of fund transfer / repatriation
- Form 15CA / 15CB — for NRO repatriation (CA-certified)
- FATCA / CRS declarations — required by all NRI accounts post-2015
Common Mistakes NRIs Make
- Applying through a resident demat account — illegal under FEMA. NRIs must convert resident demat accounts to NRI demat status as soon as their NRI status begins.
- Using NRE account for non-repatriable IPO (or vice versa) — can complicate downstream repatriation. Decide upfront based on your goals.
- Forgetting DTAA relief — paying full Indian TDS without claiming the credit in your country of residence (or vice versa) leads to double taxation.
- Missing Form 15CA / 15CB for NRO repatriation — without these, banks refuse the outward remittance.
- Applying for excluded sectors — some sectors (e.g., defence) cap NRI investment heavily. Check RHP risk factors before applying.
NRI Allocation in IPOs
Most Mainboard IPOs include an NRI sub-quota within the Non-Institutional Investor (NII) category. The NRI allocation typically ranges from 0–10% of the public issue depending on the company's policy. Some IPOs reserve a fixed amount for NRIs; others bundle them with general NII. The RHP discloses the exact breakdown.
Allotment for NRIs in oversubscribed issues works like the NII category — proportionate, not lottery-based (lottery applies to retail). NRIs cannot apply in the retail (RII) category which is reserved for Indian-resident individual investors.
Key Takeaways
- NRIs and OCIs can apply for Indian IPOs using NRE (repatriable) or NRO (non-repatriable) bank accounts. PIS is not required for IPO applications.
- FEMA caps individual NRI holdings at 5% and aggregate NRI/OCI holdings at 10% (can be raised to 24% by special resolution).
- ASBA via net banking is the most reliable method; UPI works only if your bank supports NRI UPI.
- Post-July 2024 tax rates: STCG 20%, LTCG 12.5% on listed-equity gains. First Rs 1.25 lakh LTCG per year is exempt. Indexation has been removed.
- Repatriation from NRE is unlimited; from NRO requires Form 15CA / 15CB and is capped at USD 1M / financial year.
- DTAA may reduce your effective tax rate depending on your country of residence — consult a CA.
Last updated: May 2026. NRI taxation, FEMA limits, and DTAA interactions are complex and subject to change. Always verify current rules with the RBI, SEBI, Income Tax Department, and a qualified CA before making cross-border investment decisions.