Can NRIs become India’s next big source of capital? Nithin Kamath points at this

As India looks to attract more global capital into its financial markets, Zerodha Founder and CEO Nithin Kamath believes one important source remains under-discussed: the Indian diaspora. Kamath has argued that non-resident Indians (NRIs), who often retain strong emotional and financial connections with India, could emerge as a major long-term source of investment if structural hurdles are reduced.

In a recent post on X, Kamath said discussions around foreign capital typically focus on institutional flows and global investors, while overlooking the investment potential of millions of Indians living abroad.

According to him, a large section of NRIs wants to participate in India’s growth story, but practical challenges continue to create friction. Opening investment accounts, completing documentation requirements and navigating the broader investment process can still be considerably more difficult than necessary.

NRI capital

Kamath described easier NRI participation as one of the “lowest-hanging fruits” available for attracting long-term capital into India. He noted that simplifying investment access for overseas Indians may create a more stable source of capital compared with volatile foreign institutional flows.

The timing of the discussion is notable. Foreign institutional investors (FIIs) have remained under pressure this year, with overseas investors pulling money out of Indian equities amid concerns around global markets, elevated oil prices, geopolitical developments and currency pressures.

Between May 5 and May 13, FIIs remained net sellers for seven consecutive sessions, selling Indian equities worth Rs 23,212 crore. Despite intermittent buying activity, overseas investors have largely maintained a cautious approach toward Indian markets in 2026.

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Analysts suggest that factors including global AI-related investment themes, stronger opportunities in Asian markets such as South Korea and Japan, and a weaker rupee have contributed to changing capital flows.

NRI investing

Kamath said Zerodha has spent the past year making changes aimed at creating a smoother experience for NRI investors.

However, he acknowledged that multiple regulatory and compliance-related frictions remain. Existing processes involving documentation, account structures and regulatory requirements continue to make participation more complex than domestic investing.

He expressed hope that regulators and policymakers, including SEBI and the government, would evaluate ways to simplify participation for NRIs.

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According to Kamath, for a country seeking larger global capital inflows, overseas Indians may represent the most natural starting point.

Market participants

Kamath’s views found support from investor Ashish Kacholia, who agreed that India’s systems around KYC procedures, taxation concerns and round-tripping regulations create unnecessary friction.

Kacholia argued that India should adopt a larger objective of attracting $100 billion annually and systematically remove smaller procedural barriers that discourage overseas capital.

However, not everyone shared the same view.

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Veteran investor Shankar Sharma, who said he has been an NRI for 15 years, disagreed with suggestions that investing in India is difficult. According to Sharma, the process has largely remained smooth from his experience, with brokers and custodians handling most procedural requirements.

The discussion comes as NRI financial participation continues showing signs of growth. Data indicates that NRI deposits have climbed to approximately $168 billion, while demat holdings across NSDL and CDSL continue to remain substantial. The figures suggest strong interest exists; the debate increasingly appears centered on whether India can make participation simpler and convert that interest into larger investment flows.

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