If you’re an NRI looking for investing in India but don’t
know the best options, considering the returns here the following investment
options for you:
1. Fixed Deposit
There are three types of FD for NRI. NRE FD, NRO FD, and FCNR
FD. NRE FD is maintained in Indian rupees. No tax is applicable to NRE FD. The
principal and interest earned are fully repatriable. The interest rate
applicable to NRO FD is similar to FD taken by Indian residents. Tax is applicable
on NRO FD. In the case of NRO FD, only interest amount can be repatriated. NRO FD
can be opened for 7 days to 10 years. FCNR FD is a foreign currency FD. This type
of FD can be opened by depositing income earned overseas.
2. Real Estate
NRIs can invest in both residential and commercial properties
with no restrictions on the amount or size of the property. However, NRIs are not
permitted to buy agricultural lands, farmhouse or plantations. However, selling
of property comes with some restrictions by FEMA (Foreign Exchange Management
Act), especially in case of repatriation transactions. So, hire a professional
who will guide you with all the legal documentation and procedures at the time
of purchase/sale.
3. National Pension Scheme
National Pension Scheme is a retirement savings scheme of the
Indian Government and a good investment alternative. Under this scheme,
investors are allotted unique Permanent Retirement Account Number. It is a
cost-effective and tax-efficient scheme with flexibility in investment amount
and regularity. NPS offers good returns on investment and a regular income
along with a corpus for retirement. NRIs who hold Indian Citizenship and are
between 18 to 60 years of age can invest in NPS through NRE/NRO account.
4. Insurance
NRIs can invest and buy insurance in India. With evolving
time, several insurances are designed especially for NRIs. These insurances
cover death, disability, disease and also offer lumpsum benefits. Different
mode of premium payment for insurance is available for NRIs. One can opt for
direct remittance through banking channels, remittances through postal
channels, etc.
5. Equity
NRIs can invest in the Indian stock market directly under the
Portfolio Investment Scheme (PINS) of RBI. NRIs are mandated to have an NRE/NRO
account, Demat account, and a trading account to invest in the Indian stock
market. n approval under the PIS is required for trading in the stock market.
Only one PIS Account per individual is allowed. Also, NRIs cannot trade in all
the Indian stocks. RBI publishes the list of stocks that are eligible for NRIs.
But, NRIs are not allowed to:
• Do intraday
trading or
• Short
selling in India.
Hence, NRIs can only trade on a delivery basis. NRIs need to
own the stocks before they want to sell it.
6. Mutual Funds
NRIs can invest in mutual funds only using Indian currency
and require an NRE or an NRO account to invest in mutual funds. There are no
limitations for NRIs investing in mutual funds except for the Canadian and US
NRIs. Some strict FATCA rules limit the Canadian and US NRIs to invest in
mutual funds only through 8 AMCs which are:
•SBI Mutual Fund
•Birla
Sun Life Mutual Fund
•ICICI
Prudential Mutual Fund
•UTI
Mutual Fund
•L&T
Mutual Fund
•PPFAS
Mutual Fund
•Sundaram
Mutual Fund
•DHFL
Pramerica Mutual Fund
7. Bond or Government Securities
The Government and companies require money from time to time
for various projects or their expansion. Hence, bonds are issued for borrowing
money. If you invest in bonds, you will be considered as a lender unlike equity
where you have an equity stake in the company. Being an NRI, you have the
freedom to invest in bonds and government securities. Investors get fixed
returns on such bonds issued by companies or government institutions. If
purchase is done through NRE/FCNR accounts, the proceeds are easily repatriable
to the country where you live.
The information provided in this article is generic in nature and for
informational purposes only. It is in no manner can act as a substitute for
specific advice in your own circumstances. We strongly recommend you to seek
professional guidance pertaining to your query or doubt.
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