srand with time(NULL) as argument not working in Nios

It's going to depend on your system/environment.

To use time() like you would like to, you would need at least a timer and to have set it with time of day information somehow (NTP, GPS, an RTC, manual entry, ...).

"computers" only use time() as a seed because it's nearly the only thing they have in common with each other so software can easily move from one computer to another and still work.

In your FPGA design, look for other sources of random data to use as your seed.

If you're using a compatible device, if nothing else you may want to consider the Altera Random Number Generator IP Core

https://www.altera.com/en_us/pdfs/literature/ug/ug-random.pdf