Everything an NRI needs to know about Investment Options in India

If you’re an NRI looking for investing in India but don’t know the best options, considering the returns here are 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 rupee. No tax is applicable on NRE FD. The principal and interest earned are fully repatriable. The interest rate applicable to NRO FD is similar to FD taken by an Indian resident. 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 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 insurances 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 a 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.