A stable economy and flexible investment climate have made India a hotbed of investments for non-resident Indians (NRI) in the recent past. However, inadequate information and lack of guidance have been the reasons for most them to stay away from the markets. Their options are not as many as resident Indian but enough to add feathers to a diversified portfolio. Read more about NRI investments in India.
Here are few to choose from:
1. Fixed Deposit
Bank fixed deposit is always a safe option for everyone. Since an NRI cannot operate through a normal bank account, he can invest in such instruments with Non-resident Rupee (NRE), Non-resident Ordinary Rupee (NRO) or Foreign Currency Non-resident (FCNR) accounts, which are exclusive to foreign residents. The rate of interest depends on the tenure of deposit and varies from 6% to 7%.
If one has a higher risk appetite, he or she can always invest in equities listed in the Indian market. NRI’s can invest in Indian equity market through(PIS) Portfolio Investment Scheme of RBI. But NRIs are not allowed to participate in intra-day trading. Also, the amount invested cannot exceed 10% of the paid capital. For investing in equities NRI investors have to operate through or need to link their NRE/NRO accounts.
3. Mutual Fund
In terms of investing in mutual funds, NRI investors have to abide by Fair and Accurate Credit Transactions Association rules. Apart from that, they will have to invest through NRE or NRO accounts.
NRI investors from all over the world can invest in any Indian mutual fund house(scheme) but USA & Canada NRIs have limited options. Read more about USA/Canada NRIs
Today, with most of the fund houses being available online, it is easy to track and manage portfolios. Apart from making direct investments, one can also choose to assign someone else to invest in his or her behalf. For this, the investor will need a power of attorney.
However, before making an investment, the investor should confirm whether India has signed a Double Taxation Avoidance Treaty with the country he or she lives in. Otherwise, the investor might have to pay double tax as per the law.
4. National Pension Scheme (NPS)
Government sponsored National Pension Scheme is another great taxing-efficient option where NRIs can put their money in. NPS is often referred as a perfect solution for retirement planning. This government sponsored scheme that was launched in 2004 primarily for government employees was opened for everyone in 2009. In the recent past, an array of changes has been brought into the scheme which makes it look more attractive than before. The advantage of NPS is that they get a judicious mix of equities, corporate bonds, and government bonds. Based on their return expectations and their risk appetite, an NRI can choose to invest appropriately.
5. Real Estate
Not touted as the best investment option right now, traditionally NRI investors have always invested in real estate. If bought in a good locality, such purchases can always bring handsome rental income. Also, if you a plan to move back to India sometime in the future, then buying a house could be a first step towards it. However, such transactions always happen in Indian currency often under hand.
A few things to note: An NRI investor is not allowed to invest in government sponsored PPF and post office schemes which are believed to be great tax-efficient instrument. However, if one’s citizenship changed after the time PPF account was opened, then he or she can continue to invest till the maturity period. Also, if one’s citizenship changes then he or she needs to transfer all banking services to NRO accounts.
We do provide financial consultation & online mutual fund investing platform for investors in India & NRIs(including US/Canada NRIs).
Content Source: Fund-Matters.Com
Disclaimer – The views and opinions expressed in this article are those of the authors in the content source and do not necessarily reflect any official policy.
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