Best Investment Options

Each year lots of people migrate from India for different purposes like education, job, busi-ness, etc. Some people migrate from India only for working on offshore jobs and actually earn in the foreign currency. These kinds of people who are of Indian origin or those who be-come NRIs (Non Resident Indians) over the period of time are known to be the probable source of cash inflow into India. Since last several decades, NRIs have depicted their interest in investing their funds in Indian Investments. Furthermore, the government has simplified the rules in order to facilitate NRI Investments and to enhance the economic growth of the nation.

As an NRI are you looking forward to exploring few good Investment options? Well, have a look at the below described 7 best investments for NRIs to make an investment in India.

1. Mutual funds:

In order to invest in Mutual funds, an NRI should have one out of the three bank accounts i.e., NRE/NRO or FCNR amount. It is vital to note that the investment needs to be done in Indian currency only and not in foreign currency. The amount of investment can be straight-forwardly debited from NRE/NRO accounts. An NRI needs to provide a rupee cheque or draft directly from his/her NRE/NRO account. At the release, the amount will be funded in Indian currency by any of the two ways, i.e., by cheque transfer or it gets credited to investor account directly.

However, it should be taken into account that certain countries do not permit NRIs to make an investment in mutual funds in India. Also, the tax liabilities for NRIs are basically identical to that of a resident, but the only difference is that for NRIs, tax gets deducted at source (TDS).

2. Bank Fixed Deposits:

Investment in form of bank fixed deposits is considered as the most common and one of the preferred modes of investment by NRIs. If you are an NRI, you can open one fixed deposit account in any of the Indian banks which is sanctioned to trade in foreign exchange. Discuss-ing in simple terms, an NRI can easily open a term deposit via 3 different kinds of accounts in India i.e., NRE, NRO and FCNR accounts. It is known that banks generally offer great in-terest rates on NRI Fixed Deposits and hence it this kind of investment is one of the finest Investment options for NRIs.

Let’s have a look at the 3 types of bank accounts which can be opened by an NRI:
NRE or Non Resident External Accounts: This type of account can be in the form of current, savings, recurring or fixed deposits. Moreover, it can be maintained in Indian rupees; hence, with the purpose to have NRI deposits, you should have an NRE account. It is known that NRI Deposits can typically earn an interest varying from 7 to 9% per year.

Furthermore, in India, the principal and interest obtained on NRE Deposits are actually not taxable.
NRO or Non Resident Ordinary Accounts: NRO account can be opened primarily to handle the Indian income of an NRI person and it can be in different forms such as dividend, rent, or pension obtained in India. However, it should be taken into consideration that NRO accounts provide a limited repatriation each year (currently it is capped at $1 million). Moreover, NRO Fixed deposits are payable as per Indian laws at a rate of approximately 30%.

FCNR or Foreign Currency Non Resident: NRIs can effortlessly uphold the account in foreign currency into the FCNR Fixed Deposit. The account assists NRIs to prevent the fluctuations in the exchange rate because the deposit is into foreign currency. It is known that interest attained has enough repatriation and it is tax-free as well.

3. Direct Equity:

If NRIs know their way around stock market and wish to have potentially higher returns, they are entitled to invest in Indian equities directly under the scheme i.e., Portfolio Investment Scheme (PIS) of RBI. It is important to note that only one PIS account is permitted for each NRI and each transaction accomplished by these accounts will get reported to RBI.

4. Certificate of Deposits:

Certificates of deposits (CDs) are essentially a non-negotiable money market instruments provided either in demat form or in form of promissory notes. In India, CDs are issued by financial institutions or scheduled commercial banks. These kinds of certifi-cates are provided at a discount to face value and they will usually offer a higher effective rate of return in comparison to the majority of bank deposits. This is one of the best Invest-ment options for NRIs who are looking for short-term investments.

5. Real estate sector:

Making an investment in the real estate sector is a traditional and an all-time favorite ap-proach the majority of the NRIs. An NRI can purchase residential as well as commercial properties and there is no constraint on the number of properties owned. However, NRI can-not purchase farmhouse, agricultural lands, or plantations. NRI can have possession of agri-cultural land by inheritance or gift.

6. Investment in Bonds/Government Securities:

The Government and companies need money for accomplishing different projects or for their expansion. Therefore, bonds are provided for borrowing money. An NRI has the liberty to make an investment in bonds and government securities. It is known that investors avail fixed returns on such bonds provided by government institutions or companies.

7. National Pension Scheme (NPS)

National Pension Scheme (NPS) is known to be a lucrative and government-sponsored volun-tary defined contribution based retirement savings scheme. An NRI who is still recognized as an Indian citizen and the one whose age is between 18 to 60 years can take benefit of the scheme simply by opening an NPS account. In case you are not an Indian citizen anymore then you will not be permitted to open a new NPS account.

NPS is essentially a pension scheme and has limitations on the amount an NRI can withdraw. The restrictions differ by the type of two sub-accounts it provides, i.e., Tier 1 account and Tier 2 account. Tier 1 and Tier 2 accounts provide a wide range of funds to select from like one can choose any one out of corporate bonds, equity, or government securities.

In this way, it can be inferred that there are many Investment options for NRIs to make an investment in India. Prior to making an investment, it is recommended to check the Investment rules and tax regulations of the nation where you presently live.

Author's Bio: 

My name is Archana Singh From New Delhi, India. I have done my graduation from Delhi University and professionally I am an Investment and Finance advisor in India. I worked many finance and insurance companies as a finance advising member.