There are several options available for NRI investments in India which provide room for growth. These also come with specific risks and returns. This article discusses in detail the features and potential of different NRI investment options in India.
Owing to a growing economy and the surge in start-ups, business opportunities and emerging sectors, overall, investment options in India have grown. Consequently, NRI investments in India have also seen significant growth.
Let us talk about investment opportunities in India that can help NRIs build the best investment plans.
NRI investment options in India
- Fixed deposits
Fixed deposits (FDs) are the most common NRI investments in India. FDs serve as a safe investment option since they stay unaffected by exchange rate fluctuations. This makes for one of the best investment plans thanks to higher returns and security of funds.
- NRE Fixed Deposits allow NRIs to deposit money in Indian rupees. Funds in this account are fully repatriable and exempt from taxes in India
- NRO Fixed Deposits are for NRIs who have sources of income in India also. Interest earned in the NRO account is subject to taxes
- FCNR(B) Deposits allow investors to deposit funds in foreign currencies accepted worldwide. For example, USD, GBP, EURO, AUD, and SGD. Interest earned on FCNR deposit is exempt from taxes in India and fully repatriable.
- Mutual funds
NRIs can invest in mutual funds in India. Mutual Funds are one of the most popular investments owing to its transparency as well as these are well regulated and hence, NRI find this reliable. Popularity of Mutual Funds has also gathered steam owing to the fact that these form an excellent part of the portfolio, and this being managed by professional team, investors need not have to invest time in researching on individual stocks. Additionally, different types of Mutual Funds serve different needs of the investors specially the Debt Funds, Hybrid Funds and Gold Funds.
However, NRI should know that though these are managed by professional team, these carry an inherent risk as these are market linked.
- Direct Equity
The direct equities attract a lot of NRI investments in India. NRIs can directly purchase stocks from the market under the Portfolio Investment Scheme (PIS) of the RBI. For those NRI investors who know the Indian market well, an equity investment is ideal.
Investors invest in equities in India to build wealth and earn better returns compared to fixed income instruments. The equity markets are usually volatile, and one needs to do thorough research before investing. If you are specifically looking to invest in stocks, a PIS account is also necessary.
- Real estate
Real estate continues to be one of the lucrative NRI investment option in India, where you can choose either residential or commercial properties. Most NRIs choose to put their property on rent which acts as a continuous source of passive income. Some turn their properties into hotels hostels or use them for other commercial purposes and turn them into business. This becomes a long-term, secure and high-return investment option for NRIs.
- National pension scheme (NPS)
NPS is a government-backed scheme and hence, a reliable investment option for NRIs. The NPS scheme allows NRIs to invest in equity, debts, and a combination of both. This is a tax-efficient investment and contributes to your retirement planning. You can open a digital NPS account with your PAN card or Aadhar card.
- Start-upsIndia has seen a surge in start-ups post the pandemic. This has opened doors for new investment opportunities. These start-ups pack a strong growth potential and attract NRI investment in India.
In conclusion
NRI investmentsin India are experiencing a lot of interest. As an NRI, before investing, it is important to be apprised of the rules and regulations in India for NRI investing. Make sure you are complying with the regulation and investing responsibly.
You would need an NRE/NRO account to invest in India. As a suggestion, using an NRE account for investments is better since it is repatriable, so you can freely move the money out of India and use it for investments abroad. NRO accounts restrict you to invest only in India. Additionally, for NRI, interests earned in NRE accounts are tax-free.
Consider transferring your funds from your NRO account to your NRE account. IDFC FIRST Bankoffers fast and efficient transfersfrom your NRO savings account to your NRE savings account.
This way, you would be contributing more funds towards both your international and Indian investments.
