The 27-year-old, who represents Mumbai in the domestic circuit, has played 38 T20 games, having scored 628 runs while picking up 18 wickets
Sunrisers Hyderabad has released Deepak Hooda, Martin Guptill, Ricky Bhui, Shakib Al Hasan, Yusuf Pathan.
Kelly, a right-arm pace bowler has played 16 first-class matches, five list-A games, and 12 T20s so far in his career.
As a makeshift opener in the absence of Sunil Narine, Rana struck a fine 68 in KKR's first match against Sunrisers Hyderabad on Sunday
Venky Mysore, KKR's CEO and managing director said that the franchise has already been offered the Cape Town team for South Africa's premier cricket league
IPL 2018 gets underway from April 7 and the first KKR match is scheduled on April 8 with the Royal Challengers Bangalore