What are the investment options for NRIs in India?
Being a Non Resident Indian (NRI) has become a coveted status quo for an individual. If you are an NRI, no matter whether you stay in UAE or UK or USA, you have an excellent opportunity to invest in your home country and earn good returns on your investment. India is a growing economy with a large consumer base and infrastructural development happening across the nation, offering an NRI with a number of investment options to choose from. Let us look at some of the prime investment avenues for NRIs in India.
Interest income
Income earned through interest bank accounts and deposits is the easiest of all investment options. Recently, the Reserve Bank of India (RBI) has deregulated the interest rates on NRE deposits and accounts and on NRO accounts. As a result, an NRI can earn interest of 3-4% on NRO and NRE savings deposits. In case of term deposits, an interest rate of 7%-8% is earned, depending on the term and amount.
Interests on Foreign Currency Non Residential Account (FCNR) accounts have also been freed up, giving the expats to earn interest of 3%-4% on USD and Euro deposits.
Fixed income
Fixed income is earned through corporate deposits, non-convertible debentures, government securities and PSU bonds issued in India.
Equities
Equity market is always an avenue where you can earn higher returns on your investment. An NRI can directly invest in IPOs (Initial Public Offers). However, if you are an NRI and you want to invest in secondary market or shares and debentures traded on the stock exchange, they need to do it through approved Portfolio Investment Scheme (PIS) of a bank.
Mutual Funds
Investing in mutual funds has two advantages – it is more convenient and easier to invest on the part of the investor as there is no need to avail an PIS and also because mutual funds offer the opportunity to diversify your investments through professional management.
You can avoid investing in volatile stock market by investing in mutual funds through Systematic Investment Plan (SIP) and channelise any source of regular income into equities. On the backdrop of depreciating value of money, debt mutual funds are a good option through which you can earn high returns.
Real estate
Real estate is considered as one of the safest investment options in India. It is increasingly becoming the most favoured investment option for NRIs as the depreciation in money value has resulted in increased interest of NRIs to invest in real estate.
With norms for NRI investments in real estate being simplified, more and more number of NRIs are coming forward to invest in ever appreciating realty market in metros like Bangalore, Mumbai and Delhi. Even some tier II and tier III cities have also seen demand from expats as buying a home is not just an investment option, but also an asset creation for future. Apart from residential properties, you can also invest in commercial properties.
If you are an NRI, then to choose from the above options is a decision you need to make depending on the market conditions. Although depreciating money value has resulted in earning high returns through instruments like Debt Mutual Funds for the expats in the last one year, it is not expected to last long.
You need to look at stable options to invest your money. Real estate has emerged as the most favoured option since property prices are on a constant rise in India and you are sure to get a high return after a short period of 4-5 years. Added to the price appreciation, the residential projects are increasingly coming up with world class amenities, leading to offer a unique living experience for the home owner. So, if you are planning to get possession of a home as an end user, then go for a home in your home country, keeping in mind your preference for location and facilities.
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