India is a fast growing economy and is becoming a favourite investment destination for the investors from all over the countries. The World Bank has projected that the Indian Economic Growth will be around 7.5% for the fiscal year 2019-2020.
The Government of the India has been rapidly working on improving foreign relations, making strong institutional flows and multi-year low inflation and interest rates which have contributed in improving the Indian economy. These factors create highly favorable opportunities for NRI to explore various investment opportunities in India.
The NRI’s can invest in India in through one of these means:
- Mutual Funds
The NRI can invest in India through Mutual funds subject to provisions applicable in FEMA which are the most flexible option for investment. This can be done through opening an NRE or NRO account. NRI get an option to invest in repatriable or non repatriable basis.
Because of the severe FATCA compliance requirements most NRI’s from Canada and USA can only invest in Mutual Funds through these AMCs which are:
- DHFL Pramerica Mutual Funds
- L&T Mutual Funds
- SBI Mutual Funds
- Birla Sun Life Mutual Funds
- ICICI Prudential Mutual Funds
- PPFAS Mutual Funds
- Sundaram Mutual Funds
- UTI Mutual Funds
Investing in equity is another option for the NRI’s. They can invest in stock market under the Portfolio Investment Schema (PIS) – through the secondary market. The NRIs are required to get approval from RBI in order to participate in Indian stock market but the investment of more than 10% of the paid up capital of company is not allowed.
In order to invest in stock, NRI need help of a stock broking firm to open a Demat account with a registered brokerage firm. Along with Demat account, a trading account (SEBI registered Stock Broker) and an NRO/NRE account with the bank is required.
- National Pension Scheme (NPS)
Another tax efficient investment option is investing in National Pension Scheme (NPS). The NPS is a retirement saving scheme of the Government of India. The capital invested in NPS is treated as tax free during the maturity period. The advantage of investing in NPS is that, you are not supposed to pay any tax to the government on the amount that is withdrawn as pension. NRIs holding Indian Citizenship and between the age of 18-60 can invest in this scheme.
- Real Estate
Real Estate is the favorite mode of investment for the Indian Citizen and the NRI. Being an NRI you can invest in both residential and commercial property with no restriction on size of the property. Furthermore, NRIs are not permitted to buy agricultural lands, farmhouses and plantations in India.
Deepa Kuruvilla is an Indian Corporate lawyer in India who has been working in this field since 20+ years. For any legal advice on investment in India, contact her on Qwinlaw.