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Key Takeaways: NRIs are constantly seeking investment opportunities in India - not just to grow their wealth, but also to make a small contribution to the growth of their home country. If you are one of them, find out where and how you can invest your foreign earnings in India.
As a developing economy, India has seen massive growth in the past few decades. To top it, policymakers are continuously working to build a more conducive investment environment in the country. As a result, a lot of NRIs are looking for opportunities to invest their money in India to generate higher returns as well as contribute to nation-building. So, what are the options for NRIs looking to invest in India? We look at the three best investment options for NRI in India
Fixed Deposits, or FDs, are one of the most popular investment avenues, as they provide assured returns even in the most volatile times.
Being an NRI, you can seamlessly start investing in FDs by opening a Non-Resident External (NRE), Non-Resident Ordinary (NRO) or Foreign Currency Non-Resident (FCNR) account in any of the leading banks or non-banking financial companies (NBFCs) in India. The interest rate would depend on the bank that you are choosing, deposit amount, and the tenure of the FD.
Also, the interest income from NRE and FCNR accounts are completely tax-free in India and fully repatriable to your country of residence, however it will be subject to exchange rate risk. NRO Fixed Deposits, on the other hand, can be used to earn interest on income accrued in India over time.
So, if you wish to keep your money with minimum risk, FDs can be one of the best short- to medium-term investment options for NRIs.
The Indian real estate sector has fetched good returns for investors in the last few years. Besides proving to be a fruitful investment, parking money in real estate can also help you prepare for your future if you decide to settle back in India.
Moreover, investing in properties, both commercial and residential, and leasing them out, can create a new income avenue for you. However, it is important to know that, as an NRI, you can invest in any immovable property in India, other than agricultural land, plantation property or a farmhouse. Also, there is no restriction on the number of permitted immovable properties NRIs may hold.
All you would need is an Indian passport, valid overseas address proof, a permanent account number (PAN) and a recent photograph along with the provision of investing in the property through regular banking channels.
Stocks and Mutual Funds
Many international investors like to invest in emerging markets like India. If you are seeking higher returns than an FD, albeit at higher risk, you can invest directly in Indian stocks or park your money in mutual funds.
The Reserve Bank of India’s Portfolio Investment Scheme (PIS) allows NRIs to invest in shares of Indian companies in the stock market. To carry out the purchase and sale of shares through a recognised stock exchange, you will have to set up a PIS account with any designated bank in India. Further, you will need an NRE, NRO or FCNR account and a trading and demat account under the PIS scheme.
This will allow you to acquire shares and convertible debentures of Indian companies through stock exchanges, but you can invest only up to 10% of the paid-up capital of an Indian company, as per RBI regulations.
As far as mutual funds are concerned, NRIs would have to comply with all regulatory requirements such as completion of KYC (know your customer) before investing money. A large number of fund houses accept investments from NRIs. You can make the selection based on your financial goals and risk profile.
Final Note: FDs, real estate, stocks and mutual funds are among the top investment options in India for NRIs. Whether you are investing for the short term or long term, make an informed investment decision, after weighing the risk, returns and your financial goals.
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This article is published purely from an information perspective and it should not be deduced that the offering is available from DBS Bank India Limited or in partnership with any of its channel partners. The purpose of the Live eNRIched blog is not to provide advice but to provide information. Sound professional advice should be taken before making any investment decisions. The bank will not be responsible for any tax loss/other loss suffered by a person acting on the above.