by Sanjeev Kumar Gopalakrishnan, Investing

5 Financial Pointers for NRI Investment Options in India

With India showing a super impressive economic growth rate to become one of the fastest-growing economies of the world, many non-resident Indians (NRIs) are keenly looking for ideal options to invest in India. A prosperous life today and in the future is one of the primary goals of every Indian who decides to take on the NRI identity. Hence those NRIs who seek to retain their Indian roots would definitely include NRI investment options in India while working out their personal financial planning. What are the best options for such NRIs? How can NRIs successfully prepare for investing in India as part of their personal financial planning? Let’s find out.

Who is an NRI and what accounts can they hold?

According to Foreign Exchange Management Act (FEMA) 1999, people can be called NRIs if they are Indian citizens or are of Indian origin, but are foreign nationals, residing outside India for an undetermined period of time. They could be staying abroad to pursue a job or do any business. In addition, if individuals stay in India for less than 182 days during the preceding financial year, they can also be called NRIs.

Now that we know who an NRI is, let’s look at 5 of the most popular NRI investment options in India.

Option 1: Mutual Funds

Mutual funds have become one of the most attractive investment options for even the most financially inexperienced NRI investors.  With just the right type of accounts (NRO or NRE), you can opt for short-, medium-, and long-term mutual funds. Each type has its own advantages and restrictions. The best attraction of mutual funds is in the fact that you really do not have to spend time and focus on how their value fluctuates. Your fund managers can help you manage your funds effectively. Of course, this form of investment is taxable and you may also want to check out the interest rates before you jump into making any decision.

Always make sure to check the investment timeframe and assess the benefits of making this investment before jumping into this bandwagon just because this is a popular option today. If you reside in the United States or Canada, do watch out for compliance complications under the Foreign Account Tax Compliance Act (FATCA) because of which some fund house shy away from accepting investments made by NRIs residing in these geographies.

Option 2: The stock market

Of course, you may also opt to play directly in the stock market, but RBI has strict guidelines when it comes to NRI investments in the stock market in India. For example, NRIs can only hold up to 10% of the overall paid-up capital of the chosen Indian company. They can trade only through their portfolio investment services account. They cannot speculate or trade directly, since they are allowed to just purchase or sell shares.

Option 3: Real estate

Real estate has been a perennial investment darling for NRIs. There are so many options when NRIs invest in real estate – rent from this form of investment is also an additional income. NRIs usually cannot purchase agricultural properties; however, they can purchase residential or commercial properties. But every transaction involved in making this investment must happen in Indian Rupees.

Option 4: Life insurance

If you intend returning to India later on or if your family or dependants are in India, then a life insurance policy from India is another investment option. But there are certain rules – especially the tax implications of making this decision, especially in the country you currently reside in. There are also other complications such as the need to complete the medical check-up. Given these drawbacks, you may want to consider this option only if it has obvious benefits for you and your family.

Option 5: Fixed deposits

Fixed deposits are a convenient option to save your money, by holding them for a short period of 1 year or more. The interest rates vary between banks NRIs definitely require an NRO (non-resident ordinary Rupee account) or an NRE (non-resident Rupee account) so you can maintain a fixed deposit. RBI has also stipulated other conditions. While NRE fixed deposits are not taxable with repatriation options, NRO does not offer such options. Other options such as opening a fresh PPF account is currently not available.

Selecting the right option

There are a plethora of other investment options too. But choosing the right one that perfectly fits each NRI’s requirements is tricky since it depends on the individual’s unique circumstances and life goals. Hence, always ensure that you take the guidance of an expert financial advisor from India while you make a solid financial plan for investing in India.  Since India is developing at a higher rate than most other countries in the world, this is the right time to make the investment move.  But ensure that you make well-informed investment decisions with the help of a SEBI-registered investment advisor or end-to-end financial advisor companies in India. We understand that you must be having a million questions now. Just get in touch with our experts at for customized guidance on NRI investment in India.

 About The Author

Sanjeev Kumar G, an IBS Chennai Alumni, is a Certified Financial Planner (CFP) from India, since 2005. He has 22 years of experience and is an expert in various personal finance areas like portfolio construction, investment research, life insurance and financial planning.


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