Nithin Kamath flags how painful it is for NRIs to invest in India; Ashish Kacholia, Shankar Sharma react

Zerodha founder and CEO Nithin Kamath said that a large population of non-resident Indians, or NRIs, are emotionally and financially interested in investing in India but face various obstacles that make the process “far more painful” than it needs to be.

“One thing that feels under-discussed in all the conversations about attracting foreign capital into India is the Indian diaspora,” Kamath wrote in a post on X late on Thursday. He highlighted that many of these NRIs face difficulties in opening accounts, completing documentation, and actually investing in Indian markets.

“Making life easier for NRIs could be one of the lowest-hanging fruits for attracting long-term capital into India,” he wrote, adding that Zerodha has been focusing heavily on easing the process for NRIs to invest in India. “Over the last year or so, we’ve made several changes to make investing as seamless as possible for NRIs. But there are still many frictions that exist because of regulatory and compliance requirements,” he said.

Kamath hoped that SEBI and the government would look at this more closely and think about how to make it easier for NRIs to bring money into India and participate in Indian markets. For a country trying to attract global capital, the Indian diaspora seems like the most obvious place to start, he added.

Ace investor Ashish Kacholia agreed with Kamath, saying that he made some “really good and sensible points”. “The KYC, round-tripping and tax monsters that the Indian system is obsessed with are total capital flow killers from NRIs. India needs a national objective of attracting USD 100 billion per year and then systematically removing each and every micro process that obstructs this objective,” he replied to Kamath’s post.

As the rupee nears the historic low of 96 against the US dollar, Kacholia said that if this doesn’t trigger a deep examination of our IT/KYC/round-tripping obsession, nothing will, tagging the Finance Ministry and Prime Minister’s office.

Veteran investor Shankar Sharma, however, didn’t appear to agree with Kamath and Kacholia. Replying to Kamath’s post on X, Sharma wrote that he has been an NRI for 15 years, and called the process of investing in India “smooth”.

“The broker and the custodian handle everything seamlessly. I don’t have to do anything at all except sign a few things just like any other foreign investor,” he wrote.

This comes amid an overall sharp selloff by foreign investors that has been weighing heavily on Indian markets. FIIs remained net sellers of Indian equities for seven consecutive sessions between May 5 and May 13, net selling shares worth Rs 23,212 crore during the period. Despite minor bouts of buying, foreign investors have mostly remained net sellers of Indian equities this year so far.

Analysts had listed out several reasons why FII capital was heading away from Dalal Street. Geopolitical tensions, elevated oil prices and a weaker rupee have contributed to the sharp selloff, according to Pabitro Mukherjee, Associate Vice President of Research at Bajaj Broking.

Meanwhile, markets in South Korea and Japan rallied. Analysts suggested that the momentum in the AI trade implies that FIIs will continue to sell in India.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)