NRI Asset Allocation: How to Size and Build the India Sleeve of a Global Portfolio

You are earning in pounds, dirhams, or dollars, and a chunk of your net worth already sits in India: an NRE fixed deposit, a couple of equity funds, maybe a flat in your home city, and the workplace pension or brokerage account back where you live. The question almost nobody answers deliberately is how the two halves fit together. How much of everything you own should be in India at all, now that one dollar buys not 83 rupees but more than 90? Is the rupee working for you or quietly against you? And when one side runs ahead, how do you rebalance across a border that meters money on the way out?

Most NRIs answer these by accident: they send money home when the rupee looks cheap, buy whatever a cousin recommends, and end up with an India holding whose size nobody chose. This guide is about choosing it on purpose, treating your India holdings as one sleeve of a single global portfolio. It leads with currency rather than funds because the rupee crossing 90 in 2026 has changed the maths for anyone whose goals are in a foreign currency.

The 30-second answer: Size your India sleeve to the share of your lifetime spending you expect in rupees, not to a fixed percentage. If you will retire in India, 50 to 70% of investable net worth is defensible; if you will retire abroad, 15 to 25% is usually enough, because the rupee has depreciated roughly 3.5 to 4% a year and fell about 5.5% in 2025, crossing 90 and reaching the mid-90s by mid-2026, which drags India returns in your home currency. Fix the NRE (repatriable) versus NRO (non-repatriable) split first, keeping at least 60 to 70% of the liquid sleeve in NRE. Inside India, mix NRE FDs (6.5 to 7.25%), debt, Indian equity funds, gold ETFs, REITs (7%-plus yield) and property by horizon. Hold listed equity over 12 months for the 12.5% LTCG rate above Rs 1.25 lakh. Rebalance once a year using fresh contributions first.

This is a portfolio guide, but several moves below turn on tax and repatriation rules, some of which change on 1 April 2026 under the Income-tax Act, 2025. When you start reporting India income and gains, keep the NRI ITR filing guide for AY 2026-27 open alongside this one, and confirm your residency under the RNOR rules before assuming any allocation works.

The India weight is a currency decision, not a percentage you copy

Start with the question almost everyone skips. The instinct is to anchor the answer to a percentage someone quoted, or to how much your parents think you should hold back home. Both are wrong anchors. The right anchor is your liability currency, the currency in which you will actually spend the money.

The logic fits in one line: match your assets to your future liabilities by currency. If your large expenses later in life will be in rupees, because you will retire in India, send children to study there, or support parents, then rupee assets hedge rupee liabilities and a large India sleeve is the conservative choice. If your large expenses will be in pounds or dollars, because you will retire abroad, then rupee assets carry a depreciation drag you feel every year. You are not deciding how much you love India or where returns are higher; you are deciding what share of your future spending sits in rupees, and matching the portfolio to it.

For an NRI who will almost certainly retire in India, the heavy India tilt is the hedge, not the risk. Holding 50 to 70% of investable net worth in India is defensible, because the alternative, holding most of your wealth in dollars while your costs are in rupees, exposes you to the rupee strengthening and your dollars buying less of an Indian life. This is the one case where 60% in India is conservative.

For an NRI who will almost certainly retire abroad, India is a diversification and family-support holding, not a retirement engine. The sleeve rarely needs to exceed 15 to 25%, kept modest because of the depreciation drag below. You hold some India because you have genuine rupee needs, parents and perhaps a home, but you do not stake your retirement on rupee assets that lose ground to your home currency every year.

Most NRIs in their thirties and forties genuinely do not know yet. Size India to the probability-weighted share of your spending you expect in rupees, then revisit every two to three years. If you put the odds of retiring in India at 50%, a 30 to 40% sleeve is a reasonable middle, kept flexible and heavily repatriable so you can shift it either way later. The trap is letting the sleeve grow by drift, one "the rupee is cheap, let me send more" remittance at a time, until India is half your net worth and nobody chose the total. Set a target weight, then measure against it. The framework for building that sleeve goal by goal is in building an India corpus as an NRI.

Fix the repatriable versus non-repatriable split before you buy anything

This is the decision most NRIs make by accident and regret later, because it is painful to unwind. You already know the basics, so the point that matters for allocation is asymmetry: NRE money (fresh foreign earnings, interest tax-free under Section 10(4)(ii)) is fully and freely repatriable, while NRO money (rent, dividends on pre-departure shares, an inherited flat) is taxed, hit with 31.2% TDS on interest, and capped at USD 1 million per financial year on the way out across all remittances pooled, with Form 15CA and 15CB each time. NRE is freely movable; NRO is metered.

So treat repatriability as a dimension of the allocation. As a working rule, keep at least 60 to 70% of your liquid India sleeve repatriable through NRE-linked products, so that if your retirement plans shift abroad you can bring the bulk out without hitting the cap for years. Fund every goal you can with fresh foreign earnings through NRE; ring-fence India-sourced money in NRO; and do not blend the two inside a single goal, because mixing repatriable and non-repatriable money creates a reconciliation headache the day you want funds out. The account mechanics, including FCNR, are in NRE, NRO and FCNR accounts, and the outward-transfer steps in the NRO repatriation process.

Currency: the drag that got heavier in 2026

Here is the number that should shape every allocation decision for an NRI who plans to retire abroad. The rupee has depreciated against the US dollar by roughly 3.5 to 4% a year over two decades, but the recent stretch has been sharper, not calmer: it fell about 5.5% in 2025, one of the worst years among emerging-market currencies, crossed 90 to the dollar, and traded in the mid-90s by June 2026, against the low-to-mid 80s as recently as 2024. Whatever you assumed when one dollar bought 83 rupees needs updating; the trend accelerated rather than paused.

What that does to returns is the whole point. An NRE fixed deposit at 7% looks attractive next to a dollar deposit, but if the rupee loses 3.5 to 4% a year, your real return in dollar terms is closer to 3% before any home-country tax. The headline 7% is a rupee number; your dollar wallet sees less than half. India equity is the more honest comparison: the Nifty 50 has compounded at roughly 12.4% over twenty years on a total-return basis to March 2026, which after depreciation nets closer to 8% in dollar terms, still real but no longer the double-digit story the rupee figure suggested, and competing against a home-currency index fund with no translation. Flag this honestly: the Nifty's 20-year rolling CAGR slipped below 10% in FY26 for only the second time in thirty years, alongside record foreign-investor selling, so use 12% as a long-run anchor, not a forecast you can bank.

India is not a bad investment; the point is narrower. If your goals are in your home currency, rupee depreciation is a real, recurring drag you price in by keeping the sleeve modest and not chasing the headline yield. If your goals are in rupees, depreciation is irrelevant: assets and liabilities sit in the same currency.

To remove rupee risk on a slice you genuinely need in foreign currency, FCNR deposits hold the money in dollars, pounds, or other majors at a lower rate (USD FCNR around 4.25% to 5.15% in mid-2026, GBP nearer 2.5 to 3%); the trade-off against NRE is in NRE FD versus FCNR FD. For larger hedging, instruments and costs sit in currency hedging for NRI investors, but for most NRIs formal hedging is expensive and rarely worth it; sizing the India sleeve correctly is the cheaper hedge.

What goes inside the sleeve, and the tax logic of each

Once you have decided how much India to hold and structured it as NRE versus NRO, you fill the sleeve with blocks defined by time horizon. The mistake is to choose instruments on headline yield; the right lens is after-tax, after-currency return.

NRE and FCNR deposits anchor the safe, tax-free core. NRE FD rates across the larger banks sit in the 6.50% to 7.25% range in mid-2026 (SBI 6.5 to 7%, HDFC and ICICI up to about 7.25%), interest tax-free in India under Section 10(4)(ii), making them the natural home for money you may need within two to three years and the floor of any goal. The thing residents never think about, and you must: that 7% is tax-free in India but usually taxable in your country of residence, so for a UK or US resident the useful number is the post-home-tax, post-depreciation return, which can fall to 2 to 3% in real terms. For most NRIs, NRE deposits form the bulk of the fixed-income sleeve, FCNR used selectively.

Between deposits and equity sit Indian debt mutual funds, government bonds via RBI Retail Direct, and corporate NCDs, with slightly higher expected returns, more variability, and a three-to-five-year horizon. The tax case has narrowed sharply, and this is where stale advice does damage: for specified debt funds (broadly those 65%-plus in debt) bought on or after 1 April 2023, every gain is treated as short-term and taxed at your slab rate under Section 50AA regardless of holding period, no 12.5% long-term rate and no indexation, which for an NRI often means the 30% slab plus TDS. The soft long-term rate that once made debt funds attractive is gone for new money; detail in NRI corporate bonds and NCDs and government bonds via RBI Retail Direct.

Indian equity funds are where most NRIs should concentrate the growth side, because one SIP buys a diversified, professionally managed portfolio with no need to research single companies. Listed equity held over 12 months qualifies for the 12.5% LTCG rate on gains above Rs 1.25 lakh for transfers on or after 23 July 2024; under 12 months, short-term gains are taxed at 20%. Two frictions matter: some fund houses restrict onboarding for US and Canada residents because of FATCA (check eligibility in NRI mutual funds eligibility), and for a US resident those same funds are PFICs, covered below, which can make direct equity the better route. Direct stocks through the Portfolio Investment Scheme suit only NRIs who will genuinely research companies; the comparison is in direct equity versus mutual funds for NRIs.

Gold needs a fresh look, because the easy route closed. Sovereign Gold Bonds, which paid 2.5% on top of the gold price and went capital-gains-free at maturity, were discontinued in Budget 2025, and NRIs were never eligible for fresh subscriptions anyway. So the practical vehicle in 2026 is a gold ETF or gold fund, taxed as a non-equity asset: long-term (over 24 months) at 12.5% without indexation, short-term at slab rate. Treat gold as a 5 to 10% diversifier held through an ETF rather than physical metal, for clean taxation and easy repatriation.

For real-estate income without buying a flat, listed REITs and InvITs are the liquid alternative, bought through an NRO demat account. The large office REITs (Embassy, Mindspace, Brookfield, Nexus) distributed roughly 7% to 7.5% in yield through 2026, paid as a mix of dividend, interest, and return of capital, each taxed differently, which makes the effective tax lumpy and worth modelling first. The reward is property-like income you can sell in a tranche, unlike a flat; detail in REITs and InvITs for NRIs.

Property is the illiquid bucket that sits outside the liquid portfolio, a separate line and not a substitute for the sleeve: a flat cannot be rebalanced or sold in a tranche, lands its rent in NRO where it is taxed, and ties up a large share of net worth in one asset in one city. If you buy, buy for use or for a conviction held independently of the plan; rules in buying property in India as an NRI. For the long-lock retirement layer, NPS Tier 1 is open to NRIs (Tier 1 only, funded via NRE or NRO), permits up to 75% equity, and forces 40% of the corpus into an annuity at exit with 60% taken as a lump sum. Cheap and disciplined but illiquid until 60, it belongs in the long-horizon part of the sleeve; mechanics in NPS for NRIs.

Rebalancing across a border that only meters one direction

A portfolio split across India and your home country has one structural problem: the border. Money flows into India freely through NRE, but flows out of NRO are capped at USD 1 million per financial year and need paperwork each time, and that asymmetry shapes how you rebalance. Treat the whole thing as one portfolio: your target might be 60% global equity, 25% global fixed income, and 15% real assets across both countries, and you measure drift against those combined targets, not each account separately. It does not matter that India equity ran ahead if home-country equity lagged and the global total is on track.

Then rebalance with fresh money first. Directing each month's new savings into whichever sleeve is underweight avoids selling, tax on booked gains, and cross-border transfers entirely, and for most NRIs in the accumulation phase that alone keeps the portfolio close to target without ever selling a unit. Reserve actual cross-border transfers for large, deliberate shifts, and remember that direction matters: topping up India is easy, drawing it down is metered. If your plan is firming toward retiring abroad, start shifting toward your home country well ahead of time, using the USD 1 million annual window across multiple years rather than discovering the cap in a hurry. Rebalance on a fixed annual schedule rather than reacting to headlines.

A settled NRI's India sleeve, in rupees

Put the framework on a real balance sheet. Take Priya, a 42-year-old software director in the UK, NRI since 2014, with investable net worth about Rs 4 crore equivalent: roughly Rs 2.4 crore in UK assets (pension, ISA, brokerage) and Rs 1.6 crore in India. She is undecided about where she will retire, leaning slightly toward returning to India in her late fifties, which argues for a substantial but flexible and heavily repatriable sleeve. At Rs 1.6 crore that is 40% of net worth, a reasonable middle for someone who might retire in either country.

Bucket	Instrument	Amount	Share	Channel
Return-home / emergency	NRE FD + liquid fund	Rs 24,00,000	15%	NRE (repatriable)
Fixed income	NRE FD + debt funds	Rs 28,00,000	17.5%	NRE (repatriable)
Equity growth	Indian equity mutual funds	Rs 72,00,000	45%	NRE-linked
Gold	Gold ETF	Rs 8,00,000	5%	NRE-linked
Real-asset income	Listed REITs	Rs 12,00,000	7.5%	NRO demat
Retirement sleeve	NPS Tier 1 (Active Choice)	Rs 16,00,000	10%	NRE-funded
Total		Rs 1,60,00,000	100%

Check the structure first, because repatriability is the constraint. Everything except the REIT holding is NRE-linked: Rs 24,00,000 plus Rs 28,00,000 plus Rs 72,00,000 plus Rs 8,00,000 plus Rs 16,00,000 equals Rs 1,48,00,000, or 92.5% of the sleeve, with only the Rs 12,00,000 REIT in NRO because REITs require an NRO demat account. That repatriable share lets Priya move most of this money out if she settles permanently in the UK, comfortably within the USD 1 million annual cap in a single year.

Now the currency check, since Priya's liabilities may end up in pounds. Her India equity at an assumed 12% rupee return nets to roughly 8% in pound terms after about 4% depreciation. Her NRE FDs at 7% net to roughly 3% before any UK tax, which she must declare to HMRC because the India exemption does not extend to her UK liability. That second number is the uncomfortable one: a 7% headline deposit is a 3% deposit to her real wallet, taxable on top, no better than a developed-market bond fund in pounds with no currency translation. It is why her fixed-income sleeve is deliberately modest at 32.5% combined and the growth sits in equity, where the drag still leaves a real return.

If, in five years, Priya decides firmly to retire in India, she does not change the instruments, she grows the sleeve: raise India from 40% toward 55 to 60% by directing new savings home, because her liabilities are now in rupees and the currency drag disappears.

Rebalancing the same sleeve a year later, without selling

Watch how Priya rebalances after a strong equity run. Indian equity rose 22% over the year while her deposits earned 7%, so the sleeve drifted. Starting from Rs 1.6 crore and ignoring contributions for a moment:

• Equity: Rs 72,00,000 grows 22% to Rs 87,84,000
• Fixed income (return-home plus fixed income): Rs 52,00,000 at 7% to Rs 55,64,000
• Gold: Rs 8,00,000 at 10% to Rs 8,80,000
• REITs: Rs 12,00,000 at 8% to Rs 12,96,000
• NPS: Rs 16,00,000 at 15% to Rs 18,40,000
• New total: Rs 1,83,64,000

Equity is now Rs 87,84,000 of Rs 1,83,64,000, which is 47.8%, against a 45% target; fixed income has slipped to 30.3% against 32.5%, a real but modest drift under 3 points on equity. The wrong move is to sell roughly Rs 5 lakh of equity, which books a gain and, if it pushes her annual long-term gains over Rs 1.25 lakh, triggers the 12.5% LTCG charge. The right move, because she is still contributing, is to redirect fresh money: she saves about Rs 3,60,000 a year for the India sleeve, and directing all of it into the underweight fixed-income bucket lifts it back toward target without selling a single unit, closing most of the gap with zero tax and zero cross-border transfer. That is the core discipline of two-country rebalancing: fresh contributions are the tool, and selling is the last resort. Only if equity had run to, say, 55% would Priya trim it, and even then she would first use the Rs 1.25 lakh annual LTCG exemption to book a slice tax-free.

Sample portfolios by life stage

The right India sleeve changes with life stage. Three profiles follow; treat them as starting points, not prescriptions, and adjust for your retirement-location odds and the country overlays in the next section.

For an early-career NRI in their late twenties to early thirties, recently moved abroad with careers and savings still building and the retirement location wide open, the priorities are growth, flexibility, and repatriability. Size India modestly, around 25 to 35% of a still-small net worth, because the home-country career and savings are the bigger build right now. A defensible split is 60% Indian equity funds via SIP, 20% NRE FD, 5% gold ETF, 15% NPS Tier 1: heavily equity, almost entirely NRE-funded, no property because it is too illiquid and too large a single bet this early. Setup in setting up an NRI SIP from abroad.

For a settled NRI in their late thirties to forties (this is Priya), with an established career, family, and a clearer but not certain retirement picture, size India to the retirement odds, often 35 to 50%, balanced across growth and income and still largely repatriable. A representative split is 45% equity (funds plus a small direct-equity satellite), 30% fixed income (NRE FD plus debt funds), 5% gold, 7.5% REITs, 7.5% NPS, and 5% return-home liquidity. The liquidity bucket matters because this is the decade the move home becomes a real possibility, and any flat owned sits outside this sleeve.

For an HNI NRI of any age, with large net worth, the retirement question often settled toward India, and the capacity to take illiquidity, the sleeve can be larger, often 40 to 60% of net worth, and include vehicles closed to smaller investors. A representative split is 40% equity (funds plus PMS or AIF), 20% fixed income (NRE FD, debt funds, bonds), 5% gold, 10% REITs and InvITs, 20% property as a separate bucket, and 5% other long-lock vehicles. The distinguishing features are the property allocation an HNI can afford to lock up and access to PMS or AIF, in NRI PMS and AIF. The repatriability discipline still applies, and GIFT City structures, in GIFT City investing for NRIs, are increasingly relevant at this level for holding global assets in a tax-neutral Indian jurisdiction.

Where you live rewrites the plan

The generic allocation breaks the moment you account for the tax system you live under, and this is the part most NRI portfolio advice skips, because it changes the actual instruments you hold.

For a US resident, the binding constraint is PFIC. The US treats Indian mutual funds, ETFs, and most pooled vehicles as Passive Foreign Investment Companies, meaning punitive taxation and an annual Form 8621 per fund; under the default Section 1291 regime, gains are treated as earned evenly across the whole holding period and taxed at the top rate with an interest charge, and the non-willful penalty for getting the reporting wrong has risen to USD 16,536 per violation for 2026. So the standard "just SIP into an Indian equity fund" advice is often wrong for an American: many US-based NRIs hold India through direct stocks on the PIS route or US-listed India funds instead, helped by Budget 2026 doubling the individual NRI holding cap to 10% of a company's paid-up capital. Weigh the PFIC burden into instrument choice before you buy, alongside NRI mutual funds eligibility.

For a UK resident, the relevant change is the Foreign Income and Gains (FIG) regime that replaced the non-dom remittance basis from 6 April 2025. A qualifying new UK resident (UK-resident after at least 10 consecutive non-resident years) can elect, for their first four UK tax years, to pay no UK tax on foreign income and gains, including Indian equity gains, dividends, and NRE interest, whether or not remitted. That window is the cleanest time to realise Indian gains and reposition; the catch is that electing in costs the UK personal allowance and CGT annual exempt amount that year, so it pays off mainly when your foreign income and gains are large. After the four years, worldwide income, including NRE interest that is tax-free in India, becomes fully UK-taxable. Long-settled UK NRIs are past this window and should assume NRE interest is taxable at home; recent arrivers should plan around the four years.

For a UAE resident, the position is the best on this dimension: no personal income tax, no capital gains tax on individuals, and corporate tax has not touched salaried income. The India-UAE treaty can take Indian tax on listed-share gains to zero with a Tax Residency Certificate and Form 10F in place, so a Gulf-based NRI can hold Indian equity more tax-efficiently than almost anyone, which argues for a larger, more equity-heavy sleeve than a US or UK peer, and means rebalancing equity without the LTCG friction a Western-resident NRI faces.

And watch the residency rules, because they move on 1 April 2026 under the Income-tax Act, 2025. The high-income trigger tightens: an Indian citizen or PIO whose India-sourced income exceeds Rs 15 lakh and who spends 120 days or more in India in a year (with 365 days over the prior four) is treated as RNOR, and the deemed-residency rule can make an Indian citizen earning above Rs 15 lakh from India and paying no tax anywhere a resident even on zero days in India. If you visit India often or your India income is large, count your days deliberately, because crossing into residency changes what the world can tax. Confirm your status under the RNOR rules before locking an allocation.

Edge cases

A few situations bend the rules. When you move back to India for good, you usually qualify as RNOR for the first two to three financial years, during which foreign income generally stays outside the Indian tax net. That window is the time to reposition your foreign sleeve, book gains on overseas holdings, and decide what to bring home before worldwide income becomes taxable; existing NRE deposits keep their tax-free interest until maturity even after your status changes, so do not break them early. The sequencing is in NRI retirement planning across two countries.

If your India money is mostly non-repatriable already, stuck as inherited property or pre-departure assets in NRO, your real flexibility is lower than the headline numbers suggest: bias all new money toward NRE to rebuild optionality, and start the USD 1 million annual repatriation early if you will need funds abroad, because unused room does not carry forward. And if you hold most of your net worth in one Indian flat, the most common silent risk in NRI portfolios, build a liquid, diversified sleeve alongside it rather than add more property, and understand the exit before you need it, covered in selling property in India as an NRI.

The honest read

The size of your India sleeve is a currency decision dressed up as an investment decision, and 2026 made the currency side harder to ignore. Almost every mistake NRIs make here, the flat bought on sentiment, the deposit chased for its headline yield, the slow drift toward India one remittance at a time, comes from treating "money back home" as a separate emotional category rather than one sleeve of a single global portfolio measured in the currency you will actually spend.

So here is the commitment, not a menu. For the NRI who does not know where they will retire, the common case, hold 30 to 40% of investable net worth in India, at least 85 to 90% repatriable through NRE, with growth in equity and the fixed-income slice deliberately small, because a 7% NRE deposit is a 3% deposit once the rupee and your home tax are accounted for. Build it through SIPs, rebalance annually with fresh contributions, and revisit the target every two to three years. Raise India toward 55 to 70% only when you are genuinely confident you will retire there, because then your liabilities are in rupees and the drag disappears; cut it toward 15 to 25% if you are confident you will retire abroad.

The exceptions run a different sleeve through the country overlay: a US resident treats PFIC as the binding constraint and leans toward direct equity over Indian mutual funds, a UK resident inside the four-year FIG window realises and repositions Indian gains while the UK will not tax them, and a UAE resident, on zero personal tax and a treaty that zeroes Indian share gains, can defensibly run a larger, more equity-heavy sleeve than anyone. The uncomfortable truth most guides skip: for an NRI who will genuinely retire abroad, a large India equity portfolio is often a worse deal than the headline returns suggest, because the currency quietly takes 3.5 to 4% a year and 2026 took more. Hold India for the goals actually in rupees, size it honestly, and write down the target weight and the retirement-location odds. The difference between an India sleeve that was chosen and one that simply accumulated is most of what separates a corpus from a pile.

Related guides

• Building an India corpus as an NRI
• Tax-efficient investing for NRIs
• Direct equity versus mutual funds for NRIs
• NRE FD versus FCNR FD
• REITs and InvITs for NRIs
• Currency hedging for NRI investors
• NRI retirement planning across two countries
• NPS for NRIs
• NRE, NRO and FCNR accounts
• NRI residency and RNOR rules
• NRI PMS and AIF
• Buying property in India as an NRI
• NRI mutual funds eligibility and the PFIC trap
• Selling property in India as an NRI

Critical disclaimers

This guide is general information for NRIs, not personalised investment, tax, or legal advice. Asset allocation depends on your goals, risk tolerance, tax residency, and where you intend to retire, none of which this article can know.

Tax rates, repatriation limits, and account rules cited here reflect the position as of June 2026 and change with each Union Budget and RBI or FEMA notification; residency rules change on 1 April 2026 under the Income-tax Act, 2025. The 12.5% LTCG rate and Rs 1.25 lakh exemption apply to transfers on or after July 23, 2024. Interest on NRE deposits is exempt in India under Section 10(4)(ii) but is generally taxable in your country of residence, so check your home-country rules, including the UK FIG regime and US PFIC treatment, before relying on the after-tax numbers here.

Currency depreciation and equity return figures are historical averages, not forecasts; the rupee and markets may move differently. Repatriation from NRO accounts is capped at USD 1 million per financial year and requires Form 15CA and 15CB. Consult a qualified chartered accountant and a regulated financial adviser in both your home country and India before making allocation decisions or moving money across borders.