Green Bonds for NRIs: How to Invest in India’s Sovereign Green Bonds
Neha Navaneeth
Marketing & Content Associate
Dec 22, 2025
As of 2024–25, India’s cumulative green bond issuances run into several hundred billion rupees across sovereign and corporate issuers. In November 2022, the Government of India introduced its Sovereign Green Bond (SGrB) framework, creating a formal channel through which it can use debt financing to fund renewable energy, clean transportation, and sustainable infrastructure. To the Non-Resident Indians, the NRI green bonds are a way of having portfolio diversification and impact at the same time and earn returns backed by the sovereign.
This guide is an analysis of NRI green bond investment India, regulatory frameworks, eligibility requirements, and tax implication on sovereign green bonds NRI participation.
Understanding Sovereign Green Bonds in India
Sovereign Green Bonds are Government of India issues that are based on debt. The Ministry of Finance's framework, developed with the Reserve Bank of India, aligns with International Capital Market Association's Green Bond Principles. The Sovereign Green Bond (SGrB) framework defines nine categories of eligible green expenditures: renewable energy (solar, wind, biomass), energy efficiency, clean transportation (e-mobility, metro rail, etc.), climate change adaptation, sustainable water and waste management, pollution prevention and control, green buildings, sustainable management of living natural resources and land use, and terrestrial and aquatic biodiversity conservation.
Issue Date | Tenure | Amount (₹ crore) | Coupon Rate | Subscription |
January 25 2023 | 5 - year | 4,000 | 7.10% | 4x+ oversubscribed |
January 25 2023 | 10 - year | 4,000 | 7.29% | 4x+ oversubscribed |
February 9 2023 | 5 - year | 4,000 | 7.10% | 2.69x oversubscribed |
February 9 2023 | 10 - year | 4,000 | 7.29% | 3.01x oversubscribed |
November 28 2024 | 10 - year | 5,000 | 6.78-6.84% | 30% subscribed; 70% devolved |
January 31, 2025 | 10 - year | 5,000 | Not specified | 21% subscribed; ₹3,945 cr devolved |
(Source)
Sovereign green bonds carry zero credit risk backed by Government of India guarantee, contrasting with corporate green bonds that depend on issuer creditworthiness. Corporate bonds offer higher yields (1-2% above sovereign rates) but introduce default risk. Sovereign Green Bonds generally offer better liquidity than corporate green bonds, though secondary-market liquidity can vary by issue size and market conditions.
Why NRIs Should Invest in Green Bonds
NRI green bond investment India delivers stable returns with sovereign backing. Current yields range 7-7.5% for 5-10 year tenures, providing attractive real returns. The sovereign guarantee eliminates default risk, positioning these instruments as low-risk portfolio anchors. NRI sustainable investment India through green bonds enables participation in climate finance with institutional-grade environmental impact verification through mandatory annual reporting.
Instrument | Typical Yield (10 - year) | Credit Risk | Liquidity | ESG Impact |
Sovereign Green Bonds | 7.2 - 7.4% | Zero (sovereign) | High | Verified green projects |
Conventional G-Secs | 7.1 - 7.3% | Zero (sovereign) | High | None |
AAA Corporate Bonds | 8.0 - 8.5% | Low | Moderate | Variable |
Bank FDs (NRE) | 6.5 - 7.5% | Bank default risk | Low | None |
Green bonds typically trade at marginal premiums (5-10 basis points) to conventional government securities, reflecting investor demand for ESG-aligned instruments. For alternative fixed-income options, refer to our resource on investment alternatives for NRIs in India.
Eligibility Criteria for NRIs
RBI green bond eligibility for Non-Resident Indians follows the regulatory framework governing foreign investment in government securities. Non-Resident Indians holding valid Indian passports, Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCI) cardholders qualify for direct investment. NRIs are permitted to invest in Sovereign Green Bonds primarily through the Fully Accessible Route (FAR), which allows non-resident participation without additional approvals or quantitative limits.
Investment typically requires NRE or NRO accounts, but participation in Sovereign Green Bonds increasingly occurs through the Fully Accessible Route (FAR) and IFSC-based platforms, depending on the specific issuance. NRE accounts offer optimal structure for green bonds for NRIs due to full repatriability. For comprehensive account comparison, see our guide on understanding NR accounts.
Sovereign Green Bonds designated under the Fully Accessible Route are exempt from overall FPI investment limits, allowing unrestricted non-resident participation. Individual NRI investors face no minimum or maximum investment thresholds beyond standard lot sizes (typically ₹10,000 face value minimum). Foreign nationals without Indian origin require prior RBI approval.
Step-by-Step Purchase Process
NRIs can invest in Sovereign Green Bonds either through RBI auctions conducted under the Fully Accessible Route (including IFSC platforms) or by purchasing listed bonds in the secondary market on stock exchanges.
Primary Market Auction
Ensure active NRE/NRO account linked to constituent Subsidiary General Ledger (CSGL) account maintained by authorized banks. Complete KYC requirements including valid passport, visa, address proof, and PAN card. RBI announces sovereign green bond auctions 3-5 days before auction date. Submit competitive or non-competitive bids through authorized banks before cut-off time (typically 12:00 PM IST). Non-competitive bids accept weighted average yield determined through auction, allowing NRIs allocation up to ₹2 crore per auction. Payment debits on settlement date (T+1), with bond units credited to CSGL account.
Secondary Market Trading
How to buy green bonds NRI through secondary markets involves purchasing previously issued bonds trading on NSE's WDM segment or BSE's debt platform. Link trading account to bank account and CSGL account, search for specific green bond ISIN codes, place buy orders, and settle trades following T+1 cycle. For trading procedures, consult our guide on stock trading in India for NRIs.
Tax Benefits and Risks
Green bond tax benefits NRI investors receive follow conventional government securities taxation frameworks.
Income Type | Tax Rate for NRIs | TDS Rate | Repatriation |
Interest Income | Per slab rate (30%) | 20% + surcharge + cess | Fully repatriable (NRE); $1M limit (NRO) |
Short-term Capital Gains (< 12 months) | Per slab rate | Nil (paid in ITR) | Fully repatriable (NRE) |
Long-term Capital Gains (> 12 months) | 12.5% without indexation OR 20% with indexation* | Nil (paid in ITR) | Fully repatriable (NRE) |
*Long-term capital gains on listed bonds are generally taxed at 12.5% without indexation under the post-July 2024 capital gains regime, subject to applicable tax rules at the time of sale.
Interest income attracts 20% TDS for NRIs. NRIs residing in countries with Double Taxation Avoidance Agreements may claim reduced TDS rates by submitting Tax Residency Certificate (Form 10F). For comprehensive DTAA strategies, see our resource on understanding DTAA as a smart tax strategy.
Capital gains from bonds held over 12 months qualify as long-term, with NRIs choosing between 10% taxation without indexation or 20% with indexation. Interest and gains from NRE accounts enjoy full repatriation. NRO holdings face cumulative $1 million annual repatriation ceiling requiring Forms 15CA and 15CB.
Risk Assessment
Interest Rate Risk: Bond prices move inversely to interest rates. Holding bonds to maturity eliminates this risk.
Currency Risk: NRIs earn returns in Rupees, exposing investments to INR depreciation.
Liquidity Risk: While sovereign bonds trade actively, bid-ask spreads may widen during market stress. Inflation Risk: Fixed coupon rates lose purchasing power if inflation exceeds yield.
Conclusion
Green bonds for NRIs provide sovereign-backed returns combined with verified environmental impact, positioning them as core fixed-income portfolio components. The Government of India's commitment to expanding green bond issuances to finance ₹10 lakh crore climate transition by 2030 ensures sustained primary market opportunities.
Disclaimer: Green bond investments are subject to interest rate risk, inflation risk, and currency risk. Regulatory frameworks under RBI and Income Tax Act are subject to change. Information current as of November 2025. NRIs should consult qualified tax professionals and SEBI-registered investment advisors for advice specific to individual circumstances.
FAQ
Are sovereign green bonds safer than bank fixed deposits?
Yes, sovereign green bonds carry zero credit risk backed by Government of India guarantee, while bank FDs depend on bank solvency. Sovereign bonds also offer superior liquidity.
Can NRIs invest in corporate green bonds?
Yes, NRIs can invest in corporate green bonds listed on NSE/BSE through PIS-designated demat accounts. Corporate bonds offer 1-2% higher yields but introduce credit risk.
Do green bonds offer additional tax benefits?
No, green bonds follow identical tax treatment as conventional government securities. The "green" designation refers to use of proceeds for environmental projects, not tax advantages.
How can NRIs verify green bond proceeds utilization?
Government of India publishes annual allocation and impact reports on Ministry of Finance website, providing transparency on funded projects and environmental outcomes.
What happens if NRI returns to India permanently?
Upon a change in residential status to resident, existing Sovereign Green Bond holdings may continue without forced sale, with tax treatment thereafter governed by resident taxation rules.
