The Indian government has created a conducive environment for NRIs to invest in multiple sectors. With a rapidly expanding economy and various sectors showing promise, here are some prominent investment options for NRIs in India.
Considered safest and risk-free, NRI fixed deposits in Indian banks offer stable returns and have different tenure options. NRE (Non-Residential External) and NRO (Non-Residential Ordinary) fixed deposits are popular choices, each with its own set of regulations regarding repatriation.
Investing in direct equity can be tedious for many. If you still want to enjoy the stock market ride, mutual funds are a proven way to get there. You can invest in various asset classes like equities, debt, and hybrid instruments. Depending on the fund’s policies, NRIs can invest in mutual funds through the NRE or NRO accounts. Moreover, it allows for both lump sum and systematic periodic investments. Some of the top mutual funds are HDFC Top 100 Fund, SBI Blue-chip Fund, ICICI Prudential Small and Midcap Fund, and Kotak Flexi Cap Fund. Their average returns in the past year have been 22 per cent.
The stock market’s stellar rally is expected to continue and NRIs can invest in it. They can open a Portfolio Investment Scheme (PIS) account, which is necessary for trading on the stock exchanges. IPOs offer a chance to get in early on high-growth companies, potentially reaping massive rewards if they succeed. 2023 saw Indian IPOs, like Adani Wilmar soar 145 per cent, Nykaa shine with 81 per cent gains, and Glenmark Life Sciences climb 73 per cent. Fintech start-up PB Fintech even doubled on listing day.
Whether it is fintech, e-commerce, food technology or education, start-ups of all services and sizes are shaping the new digital economy. The government has eased regulations to encourage foreign investment in the start-up ecosystem. NRIs can invest in Indian start-ups directly through angel investing platforms like Indian Angel Network and Venture Catalyst, or indirectly through registered alternative investment funds like ICICI Prudential AMC, Motital Oswal, and Tata Capital.
Government securities and bonds
NRIs can invest in government securities and bonds issued by the Indian government. These investments are considered low-risk and can provide fixed returns over a specified period. For example, GOI Savings Bond provides a fixed annual interest rate of 7.75 per cent payable every six months. This seven-year bond offers a steady and secure income stream with minimal risk.
National pension system
The NPS is a voluntary, long-term retirement scheme designed to enable systematic savings. NRIs are eligible to invest in the NPS, which offers a mix of equity, fixed deposits, liquid funds, and government funds.
Public Provident Fund (PPF)
NRIs can continue to hold and operate their existing PPF accounts. However, they are not allowed to open new PPF accounts. The PPF offers tax benefits and a fixed interest rate.
NRIs can invest in physical gold, gold ETFs (Exchange Traded Funds), or sovereign gold bonds (SGB). The first tranche of SGB, which recently matured, yielded 11 per cent growth rate. As India continues its ascent, the world looks to this dynamic nation not only as an economic powerhouse but also as a beacon of progress and opportunity on the global stage.
— The writer is Senior Wealth Manager, Quadra Wealth