What Are the Potential Benefits of Investing in ESG Funds for NRIs?

ESG funds provide NRIs with benefits like portfolio diversification, enhanced risk mitigation, and potential for long-term sustainable returns. Further, companies that have strong ESG ratings often state higher profitability and lower risk profiles, making these investments an attractive investment option for investors looking for both financial returns and sustainable impact.

Investment & Financial Planning

ESG Mutual Funds for NRIs in India

By Manish Prajapat |Last Updated: February 7, 2026

ESG stands for Environmental, Social, and Governance, three non-financial factors used to evaluate the ethical and sustainability impact of a company. ESG funds are ETFs and mutual funds that invest in companies based on Environmental, Social, and Governance (ESG) criteria, in line with SEBI’s disclosure and reporting norms. For NRIs, these investment options provide an opportunity while seeking financial returns, contribute to sustainability goals.

Further, as an environmentally concerned NRI, do you also want to stand beside Indian companies adopting ESG-compliant practices? However, do not know anything about these investments. This blog provides a comprehensive guide for NRIs who want to invest in ESG mutual funds and ETFs.

Manish Prajapat(Tax Expert)

Mr Manish is a financial professional with over 10 years of experience in strategic financial planning, performance analysis, and compliance across different sectors, including Agriculture, Pharma, Manufacturing, & Oil and Gas. Mr Prajapati has a knack for managing financial accounts, driving business growth by optimizing cost efficiency and regulatory compliance. Additionally, he has expertise in developing financial models, preparing detailed cash flow statements, and closing the balance sheets.

Frequently Asked Questions

Yes, NRIs are allowed to invest in ESG funds in India through NRE or NRO bank accounts, subject to FEMA and KYC compliance. Considering this, investments can be made via AMCs, mutual fund platforms, or authorized stock brokers.

Generally, ESG funds are suitable for long-term investors, including NRIs, as they focus on companies with sustainable business practices, better risk management, and strong governance.

ESG funds follow mutual fund tax rules. Considering this, capital gains tax and TDS apply according to the fund type and holding period, with DTAA benefits available where applicable.

ESG funds may offer relatively lower downside risk over the long term because of the stricter screening of social, environmental, and governance factors, though they are still impacted by market volatility.

NRIs should evaluate the ESG methodology, expense ratio, past performance, taxation impact, and alignment with their risk appetite and financial goals before investing in ESG funds.

ESG Mutual Funds for NRIs in India

Frequently Asked Questions

Can NRIs Invest in ESG Funds in India?

Are ESG Funds Suitable for Long-Term Investment by NRIs?

How Are ESG Fund Returns Taxed for NRIs?

Do ESG Funds Offer Lower Risk Compared to Traditional Funds?

What Should NRIs Check Before Investing in ESG Funds?

ESG Mutual Funds for NRIs in India

Frequently Asked Questions

Can NRIs Invest in ESG Funds in India?

Are ESG Funds Suitable for Long-Term Investment by NRIs?

How Are ESG Fund Returns Taxed for NRIs?

Do ESG Funds Offer Lower Risk Compared to Traditional Funds?

What Should NRIs Check Before Investing in ESG Funds?