India has grown tremendously in the previous several decades. To top it all off, policymakers are striving to improve the country’s investment climate. As a consequence, many NRIs are seeking methods to invest their own money in India to make higher returns while also helping the growth of the country. So, what options do NRIs have when it comes to investing in India? Let’s have a look at the top options.
The huge array of possibilities available to NRIs seeking to purchase in their homeland might be bewildering. Their confusion is exacerbated by the incorrect and inadequate advice they receive from banking relationship managers. They usually end up putting their money into ventures that benefit wholesalers rather than investors.
Best Investment Opportunities in India for Non-Resident Indians
Here are some of the top investment opportunities for non-resident Indians looking to invest in India.
1. Fixed-Income Investments
Fixed deposits are popular not just among Indian nationals, but also among non-resident Indians. Direct depositing at institutions is among the safer choices and hence the most well-known. Non-Resident Indians can deposit funds in India using one of the following:
- Fixed Deposit in a Non-Resident Alien (NRE) Account (Non-Resident External Account)
- Fixed Deposit in a Non-Resident Alien Account (Non-Resident Ordinary Account)
- FCNR Fixed Deposit Account (Foreign Currency Non-Resident Account)
2. Real Estate
Real estate values have skyrocketed throughout the years. It is quite easy for Non-Resident Indians to own property in India and rent it out for extra income. Real estate is a wonderful investment since it provides good long-term profits as well as consistent growth over time.
Non-Resident Indians can use the following bank accounts to purchase or sell property in India:
- External Account for Non-Residents
- Ordinary Account for Non-Residents
- Non-Resident Foreign Currency Account
Assetmonk is the fastest-growing wealth-tech platform in India, specializing in commercial real estate investments. Assetmonk, which caters to investors from all around the world, provides high-quality investment options at moderate costs through fractional ownership. NRIs can readily have access to grade-A assets with no time-consuming complications. Assetmonk offers investment solutions based on different risk appetites to better understand individual investor objectives such as passive income, capital appreciation, and risk reduction.
3. National Pension Scheme
The National Pension Scheme might be a more stable source of investment. It is a fully government-backed plan that allows Non-Resident Indians to participate in either stock, debt, or a mix of the two. A National Pension Scheme is for those between the ages of 18 and 60, and it may be started with just Aadhaar and a PAN card.
Non-Resident Ordinary Accounts and Non-Resident External accounts are often utilized when investing in National Pension Scheme. You have two options under the National Pension Scheme:
In which the asset is assigned in the middle
- Bonds issued by corporations
- Government Issued Securities
When making an active option, up to 75% (maximum) of the equity can be allocated.
- The asset allotted is entirely determined by the age of the Non-Resident Indian.
- The term “auto” refers to the fact that the investments are distributed automatically and can be changed by the investor.
4. Mutual Funds
Mutual funds are becoming increasingly popular these days. NRIs with minimal experience in overseas investment might certainly benefit from mutual funds. Before making any type of investment, it is critical to understand the characteristics of mutual funds and if they are available to NRIs from Canada or the United States. Another significant requirement is the review of home party guidelines.
Non-Resident Indian mutual fund investments are governed by the Foreign Exchange Management Act (FEMA) of 1999. According to government regulations, NRIs can participate in the following Indian capital markets:
- Direct investments,
- Mutual funds, etc.
- ETFs are exchange-traded funds.
Mutual fund investments are susceptible to market risk and are thus riskier than fixed deposits or national pension plans. An NRI should choose funds based on their risk tolerance and financial goals. The following are the key points of Non-Resident Indians investing in Mutual Funds:
- Money can be deposited into a Non-Resident External Account and invested.
- Money can be deposited into a Non-Resident Ordinary Account and invested.
- Money may only be invested in Indian national currency, not in foreign money.
5. Public Provident Fund (PPF)
For NRIs, a Public Provident Fund (PPF) account investing is a 100% safe and government-backed investment. An Indian person can open a PPF account and begin investing at any time. On the other hand, if an NRI does not already have a PPF account, he or she cannot profit from this plan. They cannot, under any circumstances, extend their Public Provident Fund Account after 15 years of the prescribed maturity time under the PPF Account for NRIs.
If an NRI is an ambitious investor then investing in stock is a good alternative. NRIs can readily participate in the Indian stock market through the Reserve Bank of India’s portfolio investment plan. Non-Resident Indians’ bank accounts for stock investments are as follows:
- External Account for Non-Residents
- Ordinary Account for Non-Residents
- Depository Account
To invest in the Indian stock market, open a trading account.
7. Plans for ULIPs
NRIs (Non-Resident Indians) enjoy the same rights as any other Indian resident to invest in ULIPs (Unit Linked Insurance Plans) under the Foreign Exchange Management Act (FEMA). It is regarded as one of the most popular and dependable investment solutions.
The main advantage of ULIPs is that they provide a dual benefit of investment and insurance, which eventually aids in the accumulation of wealth if invested prudently over time. Another factor attracting NRIs to invest in ULIPs is the availability of tax benefits. ULIP premiums are deductible under Sections 80C and 10(10D) of the Income Tax Act of 1961. If an NRI (Non-Indian Resident) chooses to invest in a Unit Linked Insurance Plan (ULIP), the premium can be paid in the following ways:
- Any bank account in India
- Any NRE or NRO bank account is acceptable.
Non-Resident Indians (NRIs) Must Invest in India for Several Reasons
Now that we’ve established the top investment opportunities in India for Non-Resident Indians (NRIs), it’s time to evaluate why an NRI must consider investing in India. Here are some of the reasons why NRIs might consider investing in India:
1. To Plan for Retirement
Getting financially and physically prepared for old life should be a top goal for anybody. To ensure one’s future, one should invest their savings across many platforms. The amount of money you save invest for your potential development the standard of living you will have. As a result, it is much more vital for NRIs to safeguard their future since they are living in another country and must be completely safe and secure but they’re far away from friends and family.
2. To Obtain Good Returns
Money invested in the proper path today will result in more money on hand in the future. Whatever an NRI invests, regardless of how much money he or she has, will lead to progress in India. Higher interest rates increase risk but also profit, whereas low-interest rates significantly reduce risk while increasing profit. It is strongly advised to invest cautiously and to assume just the amount of risk that someone can afford in the future.
3. Savings for the Family
If an NRI (Non-Resident Indian) wants to transfer money to a family in India, further NRI investment will come to his or her aid in the time of need. Even if an NRI earns enough in the nation where he or she resides, an NRI investing will ensure that he or she has some more pounds in his or her pocket, which will eventually benefit the family.
4. Creating Financial Assets
The right investments can help you acquire financial assets and expand your financial fortune. For example, if an NRI has sufficient funds, he or she might look forward to purchasing a home in India. This residence will provide rental income or could be used as collateral when asking for a loan. As a result, an NRI investment might assist you in accumulating financial assets which will undoubtedly benefit you in the long term.
Because of globalization, investment prospects are expanding by the day. Non-Resident Indians who want to invest their own money in their nation now have a lot more options than in the past. Investing in India offers several opportunities, but it is essential to properly comprehend the investment before proceeding. Before investing, one should consider their money and savings. It is also critical to comprehend the investing possibilities before proceeding with the investment.