India being one of the developing economies in the world, serves a lot of options for NRIs to invest and secure their future. Most of the NRIs prefer to invest in India so as to gain higher returns and procure long term financial stability.
If you are an NRI and thinking of investing in India, the most common confusion comes to your mind is residential status, especially if you have recently shifted abroad. NRIs can easily invest in India, they just have to follow some rules and regulations prescribed under FEMA act. To clear your all doubts and give you the best and safest investment options available in India for NRIs, we have got a complete list for you.
1. Bank Fixed Deposits- Fixed Deposits are not only popular but also the safest investment option available for both the resident Indians and NRIs. You can start FD with your NRO and FCNR accounts and gain high returns. The returns or rate of interest totally depends on the amount and tenure of your deposit and are not affected with any market fluctuations. Usually banks provide a high rate of interest on higher amounts deposited for a longer duration. So, you can freely invest in fixed deposits if you are not ready to take any kinds of risk. There are 3 types of FD accounts-
Types of Fixed Deposit Accounts for NRIs
|● Interest Rate- 5 to7.50%|
● Principal and Interest is tax-free
● NRE FDs get covered under DICGC (Deposit Insurance and Credit Guarantee Corporation) insurance.
|Rate of Interest-5 to 7%|
Principal and interest is taxable.
The interest earned is taxable at a rate of 30%.
|You will get tax-exemption on the entire deposit and interest amount in your FCNR FD account.|
You can avail overdraft facility on your NRO savings/ current account against your FCNR FD account.
2. Direct Equity- No matter how far you are from your birth land, you will always remain connected to your roots for sure. As Indian economy is one of the fastest growing economies in the world, NRIs can take advantage and invest in direct equity. Investing in direct equity simply means investing in the stock market.
Participating in such types of investments helps NRIs to create wealth while contributing to the country's economy. In this way, you can diversify your portfolio under the PIS(Portfolio Investment Scheme) of RBI. Following this scheme, you will have to create an NRE or NRO account with any Indian bank authorized by RBI because your total investment cannot exceed 10% of the paid-up capital. Also, you will have to create a trading account and demat account that will hold your shares in an electronic form to easily trade in stocks on the NSE(National Stock Exchange)of India. When investing in stocks, you will be liable to TDS(Tax deducted at source).
3. Government Securities- As per the recent announcement by RBI, NRIs can invest in government securities without any quantitative limit. This option comes under FAR(Fully Accessible Route). There are various types of government securities that you can opt for-
|Fixed Rate Government Bonds||Floating Rate Government Bonds||Capital Index Bonds (CPI bonds)|
|Interest rate is fixed||Interest rates will change according to market fluctuations.||Interest rates will be adjusted based on current inflation rates.|
4. Real Estate- As the risk involvement is low in this sector, NRIs can invest in real estate as well. Real estate is growing at a higher rate and holds valuable prospects in the sectors like housing, hospitality, commercial, retail and manufacturing. As the price of property keeps increasing, more possibilities of getting high returns in this sector. Investment in real estate can be done in various ways- by investing in commercial property such as shops and offices, residential property or by investing in real estate mutual funds. Make sure to have thorough research on the property you are going to invest, take help of a real estate broker to get all the work done for you. While going for residential investment, must keep in mind that you are allowed to invest in commercial or residential properties not any agricultural land.
5. National Pension Scheme- NPS is the best option for all those NRIs who are looking for long term investment along with equity exposure in your portfolio. NPS allows you to perform equity investment, fixed income instruments and government securities. Investing in NPS is based on a long term retirement plan where your savings will get locked and after retirement you will get a lump sum amount and the rest amount will be used for pension. There will be 2 types of NPS accounts-
Tier 1 Account
Tier 2 Account
|Funds will be locked until retirement.|
You will receive 20% of the investment.
You are allowed to take 40% of the investment after the age of 60 years.
|This account allows you to decide your portfolio structure and can be attained with the use of a diversified investment strategy.|
6. ULIP- Unit Linked Insurance Plans are provided by various insurance companies. You will be provided with a single integrated plan including both the insurance and investment options. NRIs who are looking for long term financial plans along with secure returns can opt ULIPs investing plans. According to this plan, you will have to pay a premium monthly or annually as per your comfort. A part of it will be used for insurance cover and the rest will be invested in the fund like equity, hybrid or debt.
Investing in India is an effective way to participate in the indian economy as Indian market shows a high scope of growth. So, what are you waiting for? Choose any of the above Investment options that is best suitable to your needs.