For an industry with an AUM of over Rs 42 lakh crore, managing 2.19 lakhs of clients, the Portfolio Management Services (PMS) business in India has a curious blind spot: almost none of that growth has come from non-resident Indians.
"More NRIs are showing interest in India's growth while also wanting global diversification," says Biharilal Deora, Chairman of the Association of Portfolio Managers in India (APMI), the industry's self-regulatory body. "Many overseas investors want options that mix India's opportunities with access to international markets, sectors, and currencies. Recent market ups and downs have made diversification even more important, so hybrid and multi-country strategies are becoming more popular for both domestic and inbound investors."
That framing — NRI money as a diversification play for the diaspora, and a stabilising force for India — is central to why APMI has highlighted the non-resident opportunity to SEBI while it is revisiting PMS rules for the first time since 2020.
Ashok Kumar, E R, Chief Client Officer, at Scripbox, says the profile of the overseas Indian investor has changed materially over the years. "Today, their dialogue has fundamentally shifted from traditional savings to active participation in India's capital markets," he says. "With the global Indian diaspora managing trillions of dollars in personal wealth, NRIs have transformed from passive remitters into active co-architects of India's economic boom."
The numbers behind the pitch
Remittances represent the traditional way NRIs engage with India. India's remittance story had a strong year: inward remittances touched $143.6 billion in FY26, up 16.3% over the previous year, according to RBI's current account data. The US alone contributed 27.7% of the total (enough for advanced economies to overtake the Gulf as India's largest source of remittances for the first time).
That evolution reflects a broader shift in how overseas Indians engage with India. "NRI contributions have evolved from primarily remittance-based support for families to sophisticated, return-seeking portfolio and direct investments," Kumar says, with bespoke PMS mandates, AIFs and GIFT City products increasingly replacing traditional deposit-led participation.
Read together, this isn't a diaspora disengaging from India but one that has outgrown the traditional NRE and FCNR deposit window, says Tanvi Kancchan, Head – Strategy at Anand Rathi Shares & Stock Brokers. "These are investors who manage sophisticated portfolios in their countries of residence and are looking for the same rigour when deploying capital back home. PMS offers exactly that: direct ownership, professional management and full transparency. The product is right; what remains is making the access genuinely frictionless."
India receives over $140 billion annually from its overseas diaspora, yet industry participants estimate NRI investors contribute only a low single-digit share of PMS assets. The gap, they argue, is less about appetite for India and more about the friction involved in investing through the PMS route.
How could PMS fill this gap: Kancchan argues that PMS naturally addresses many NRI-specific requirements. Direct ownership of securities in an investor's own demat account offers transparency and control, discretionary management solves the time-zone challenge, while India-linked equity provides genuine rupee diversification for investors whose income and assets are largely denominated in foreign currency.
Yet with the PMS industry's AUM compounding at roughly 17% CAGR since FY21 and its client base crossing 2.15 lakh across 501 registered managers, that growth has been "almost entirely domestic," with NRI clients remaining structurally underrepresented.
Kumar believes higher NRI participation could also reshape the industry's product mix. According to him, overseas investors typically bring larger ticket sizes, longer investment horizons and demand for cross-border advisory, tax structuring, currency hedging and estate planning, encouraging wealth managers to develop more sophisticated offerings while raising compliance and technology standards across the industry.
What Budget 2026 did — and didn't — change
Budget 2026 doubled the individual NRI investment limit in listed Indian companies from 5% to 10% and strengthened the Portfolio Investment Scheme (PIS) — a move APMI believes could materially expand overseas participation. "Recent budget announcements on the PMS route for persons resident outside India (PROI) are a great example of such an enabler, with a focus on ease of onboarding that can bring a flood of capital into Indian markets," Deora says.
Kancchan says the regulatory direction is positive but incomplete. While Budget 2026 expanded investment limits, she argues the bigger challenge remains the onboarding journey, particularly for NRIs who continue to face documentation requirements that resident investors complete digitally.
But wealth management executives advising NRI clients on PMS allocations say that the ground reality hasn't shifted much since. When asked how far the budget announcements have actually moved the needle for persons of Indian origin residing abroad, an executive answered: "It isn’t significant. Especially in the context of the volatility we saw in market this year, alongside rupee depreciation. The first indication can be revealed from how many newer accounts have been opened. Not substantial"
The core complaint isn't the investment cap. It's what happens before an NRI can invest at all.
Opening a PMS account still typically requires a demat account and, in many cases, an NRI bank account, each governed by a different regulators. In case of India, that’d involve RBI intervention and IFSCA. That means significant coordination and time-taken. Layered on top are attestation requirements, sometimes routed through an embassy or a bank's overseas representative office. This can run to roughly $100 per set of documents, on top of physical signatures and hard-copy paperwork that assume the investor is sitting in India.
Industry experts point at KYC processes and onboarding processes being a very critical pain point. Even resident investors face repeated onboarding across products with as yet no single-window timelines or paperless processes. "It's worse for NRIs because of two things: they need a bank account too, and you have one more regulatory body involved," the executive added.
Separately, several PMS providers still don't onboard NRI clients based in the US and Canada at all, citing FATCA compliance complexity — effectively locking out India's most financially capable diaspora segment.
Where the deliberations stand now
SEBI Chairman Tuhin Kanta Pandey first announced undertaking a "comprehensive review" of the 2020 Portfolio Managers Regulations, in February. While the initial timeline was June, the relevant bodies are still deliberating through July and the consultation paper is expected soon.
APMI says it has been working with SEBI for four years on regulatory feedback and has submitted a global benchmarking study comparing other jurisdictions. Deora frames the association's ask plainly: "Key recommendations will include facilitating global capital in India via an NRI/PROI framework, making the PMS framework available for larger global wealth trends and improving communication and ease of business for both investors and managers," Deora said.
The tax question, and what other diasporas have tried
India's tax treatment of NRI portfolio investments isn't yet on par with rival hubs like Singapore or GIFT City-style offshore structures elsewhere, which raises the question of why a sophisticated NRI investor would route capital through India at all rather than build a more tax-efficient structure abroad. The suggestion from within the industry is to extend GIFT City-style tax treatment more broadly to NRI capital rather than confining favourable treatment to one enclave.
Kumar also argues that India's regulatory framework has become progressively more investor-friendly, particularly after the expansion of investment limits and GIFT City initiatives. However, he says further gains could come from single-window digital onboarding, standardised e-KYC, smoother demat and bank account opening, clearer tax treatment under DTAAs and wider promotion of GIFT City as a global wealth management hub for NRIs.
India isn't alone in trying to engineer diaspora capital into formal investment. Israel has raised more than $40 billion since 1951 through diaspora bonds distinguished by flexible fixed and floating rate structures. And notably, by registering with the US SEC, which gave it access to the American retail investor base that India's own diaspora bond efforts have deliberately avoided in order to sidestep US regulatory and disclosure burdens.
The Philippines has taken a different, more digital route: its state-backed Overseas Filipino Bank now serves diaspora clients across 130 countries through an app-first model, part of a broader push that has pushed digital payments past half of all retail transactions domestically.
Both examples point the same way: that reducing friction and building digital-first, diaspora-specific rails tends to matter as much as the headline investment limit or tax rate.