India offers NRIs multiple passive income avenues, from investment-grade bonds and G-secs to dividend-paying equities and income-yielding real estate. Explore the full blog to understand which options align with your risk profile and long-term income goals.
For many NRIs, India remains an emotional anchor; a place of family, familiarity, and long-term connection. But increasingly, it is also becoming a strategic location to build structured passive income.
Compared with other economies, India presents a unique equation: higher nominal growth, improved creditworthiness, and expanding capital markets.
In this blog, we break down why building passive income from India can make long-term financial sense for NRIs and explore the investment options that align with different NRI risk profiles, income goals, and return expectations.
Why NRIs Should Build Passive Income from India
India today stands at a rare inflection point. It is not just one of the fastest-growing major economies, but also one that global credit agencies continue to recognize for improving macro stability. With S&P recently upgrading India’s sovereign rating to BBB and recent years’ outlook improvements signaling structural resilience, the country is increasingly viewed as a stable emerging-market destination.
For NRIs, India poses as a yield-generating, growth-backed market supported by strengthening fundamentals. Here are three reasons why NRIs may consider to build passive income from India.
Yield Advantage Over Developed Markets
One of the most tangible reasons NRIs look toward India is the yield differential. As a developing economy with higher nominal growth than mature markets, India structurally offers higher bond yields.
For instance, the U.S. 10-year benchmark treasury bond currently yields around 4.17%, while India’s 10-year government bond offers roughly 6.7%.
Note: The yield mentioned is as of 13/02/2026
Favorable repatriation and account structures
India gives NRIs structured flexibility under the Foreign Exchange Management Act (FEMA). NRE and FCNR accounts allow full repatriation of principal and interest without Reserve Bank of India (RBI) limits, and interest earned remains tax-exempt in India. Even NRO accounts permit up to USD 1 million annually. This clarity, combined with Double Taxation Avoidance Agreements (DTAAs), makes moving income abroad predictable and operationally simple.
Diversification and lower correlation with home markets
Indian markets do not always move in sync with the U.S., U.K., or other developed economies. Different growth cycles, interest-rate environments, and sector drivers create varied return patterns. By allocating part of their passive income portfolio to India, NRIs reduce overexposure to a single geography. This geographic diversification can help balance risk and smooth overall portfolio performance across global market cycles.
With these structural advantages in mind, let us now examine the key passive income options available to NRIs in India.
Best Passive Income Investment Options for NRIs in India
India offers NRIs with a wide spectrum of passive income avenues, ranging from sovereign-backed debt to growth-oriented equity and real estate assets, each catering to different income expectations and risk appetites.
Investment-grade Corporate Bonds
Investment-grade corporate bonds are debt securities that let NRIs earn predictable income from financially stable companies. These bonds are rated from AAA to BBB- and offer 8% to 14% returns on average. Investment-grade corporate bonds fall within the lower-risk segment of the corporate credit market. CRISIL data shows AAA-rated bonds recorded 0% defaults over three years, while BBB- bonds saw about 2.21% in the same period.
Government Securities
Established in March 2020, the Fully Accessible Route (FAR) framework allows NRIs to invest in Indian government securities without investment caps or restrictions.
Government securities, or G-secs, are debt instruments backed by a sovereign guarantee. These include Treasury Bills (T-bills), dated government bonds, State Development Loans (SDLs), and municipal bonds. Because the government stands behind these issuances, they carry minimal credit risk.
That safety, however, comes with relatively lower returns compared to privately issued corporate bonds. Experts often suggest investing in G-secs for capital preservation or parking funds for short- and long-term goals. With maturities ranging from 91 days to 40 years, they offer NRIs flexibility across different time horizons.
Equity Investments
Over the past 10 years (2016-2026), the Indian equity benchmark index Nifty 50 has delivered almost 14% CAGR, giving the Indian equity markets a slighter upper hand when compared to the markets of developed nations.
Beyond historical performance, India’s equity markets continue to evolve, with sectors deepening and new businesses entering the listed space. This ongoing maturation creates room for further price discovery in the Indian market.
For NRIs, dividend-paying equities add another layer of appeal to the asset class. Alongside potential capital appreciation, consistent dividend payouts can serve as a growing passive income stream linked to India’s long-term growth trajectory.
Real Estate and High Income-yielding Property Assets
India’s real estate sector has shown sustained momentum and resilience in recent years, with total residential sales in major cities rising nearly 77% from FY 2019 to FY 2025, highlighting strong buyer and investor confidence.
For NRIs, income-yielding real estate, such as rental residential properties, commercial office space, and logistics or warehousing assets, can generate steady passive income through rent. NRIs can further increase exposure to India’s real estate and infrastructure structure through investment instruments like Real Estate Investment Trusts and Infrastructure Investment Trusts (InvITs).
Fixed Deposits (FDs)
Fixed Deposits remain one of the most straightforward passive income options for NRIs. Through NRE and NRO accounts, NRIs can park foreign or Indian earnings in rupee-denominated deposits and earn assured interest over a fixed tenure.
NRE FDs allow full repatriation of principal and interest, and the interest earned is tax-free in India. NRO FDs manage income earned within India, such as rent or dividends, though interest is taxable and repatriation is capped at USD 1 million per financial year. For NRIs seeking capital stability and predictable cash flows, FDs provide clarity, defined returns, and flexible tenures.
Since each asset class carries a different level of risk and return potential, aligning these options with individual risk tolerance becomes essential.
How to Choose Passive Income Avenue Based on Risk Profile
The table below maps passive income options to different NRI risk profiles, based on how market participants typically align return expectations with risk tolerance.
| NRI Risk Profile | Government Securities | Fixed Deposits | Investment-grade Corporate Bonds | Real Estate / REITs | Equity Investments |
| Capital preservation-focused | Best suited | Best suited | Limited allocation | Not preferred | Not suitable |
| Conservative income-seeking | Suitable | Best suited | Suitable | Limited exposure | Minimal exposure |
| Balanced growth & income | Moderate allocation | Moderate allocation | Best suited | Suitable | Limited allocation |
| Growth-oriented income builder | Limited allocation | Limited allocation | Suitable | Best suited | Suitable |
| Aggressive wealth maximizer | Minimal allocation | Minimal allocation | Moderate allocation | Suitable | Best suited |
Final Thoughts
India currently offers a combination of yield potential and structural growth that few major economies can match at this stage of the global cycle. Recent credit rating upgrades further reinforce confidence, signaling macro stability and strengthening trust among NRIs who wish to build reliable income streams from their home country.
When approached thoughtfully, India can move beyond being a legacy allocation and become a deliberate pillar in an NRI’s global passive income strategy.
