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How To Invest In The Indian Stock Market From The US


This guest post is contributed by choiceindia.com

Stocks may be the most acceptable option for you if you're an NRI looking for the best investment opportunities in India. After the United States and Japan, India has the third-largest investor base worldwide. For NRIs who wish to engage in Indian stock markets under the Portfolio Investment Scheme (PIS), which is governed by the RBI, the Foreign Exchange Management Act (FEMA) has set forth several regulations.

Being a Person of Indian Origin (PIO) or an Indian citizen residing outside India qualifies you as an NRI. There should be a minimum of 60 days and 182 days throughout your stay in India during a given fiscal year. You will still be recognised as an NRI if you meet this requirement, even if you spent 365 days or more in India over the previous four fiscal years. You may also qualify for NRI status if you are sent abroad for a period longer than six months.

How to Make Stock Market Investments Using PIS?
You can only have one PIS Account (Portfolio Investment scheme) for stock market investment if you're an NRI and create a Non-Resident External (NRE) Account with a bank that has received approval from the RBI. You can deposit money in any currency and withdraw it in rupees by using this account since the money you deposit is converted to rupees when it is placed there. An NRE account can be opened in a variety of formats, including savings and current or recurring deposits that are also subject to exchange rate changes.

After creating an NRE account, these are the next steps to follow
The actions listed below must be followed to invest in Indian stock markets:

  • You must mention your SEBI-registered broker's name when registering a PIS Account.
  • A PIS approval letter will be issued by the bank and must be provided to the broker.
  • The broker now allows you to open a free Demat Account and Trading Account.

PIS Account: What it Means?
The Portfolio Investment scheme (PIS) Account, which is connected to the Trading Account and Demat Account and serves as residents of India's equivalent of a bank account, is where NRIs invest their money.

How to Open a Share Market Account?
If you are thinking how to open a share market account in India from the US? To open a share market account, the following important documents must be submitted by the NRI Demat account holder to set up a trading cum Demat account. Once these documents have been provided and validated, the broker can proceed with processing the application for trading and Demat account:
  • PINS letter (Portfolio Investment Scheme), FEMA declaration, and a copy of the PAN card are all attached. The FEMA Declaration is crucial for confirming the source of funding.
  • NRIs must produce copies of their foreign passports, Indian passports, PIO cards, OCI cards, and other documents. Officials from the embassy can notarize photocopies.
  • For the bank's records, the NRI must provide documentation of their international address and a bank cheque that has been cashed from their international account.
  • Before opening the trading and Demat account, the NRI will also need to sign and execute a FATCA (Foreign Account Tax Compliance Act) declaration as part of the PMLA (Prevention of Money Laundering Act, 2002).

Additional information that an NRI Demat account holder should be aware of
  • NRIs are only permitted to trade on a delivery basis in stock markets; they are not permitted to trade intraday.
  • An NRI may purchase convertible debentures and shares of Indian corporations through stock exchanges, but the total amount of investment is limited.
  • By a directive from the RBI, an NRI is also prohibited from investing in particular equities and industries.

The Bottom Line
With a steady increase in foreign investment over the years, India is one of the top emerging markets globally. Investing in the Indian stock market could be a wise choice if you're trying to diversify your investment portfolio by purchasing foreign stocks. As a result, using the PIS platform, which is under the control of the RBI, NRIs can participate in Indian stock markets.

It is crucial to open an NRI Demat account with a reputable financial partner before investing in the Indian stock market. You have access to various investment options, devoted relationship managers, and a simple online account setup process through Choice India NRI financial advising services.

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