According to the IMF projections of 2021, India is the fifth fastest-growing economy in the world. Also, due to continuing industrial developments, India is attracting foreign direct investment (FDI). This has prompted NRIs (Non-Resident Indians) to invest in India to generate profits. Here in this article, we have sorted the best options for NRIs to plan their investments in India.
1. Fixed Deposits (FDs)
FDs are as popular among NRIs as among the residents of India. FDs are amongst the safest NRIs Investments schemes available in India.
NRIs can invest in fixed deposits through NRE, NRO and FCNR accounts. Let’s see how they are different.
Fixed deposit in NRE account
- Non-Resident External account can be maintained as savings, current or fixed deposit account.
- NRE account accepts deposits in foreign currency and allows withdrawal in the Indian rupee.
- The interest rates vary from 5% to 7%.
- The interest received is not taxable in India.
Fixed deposit in NRO account
- Non-Resident Ordinary account accepts deposits in INR and also allows withdrawal in INR.
- The interest rates applicable vary from 2% to 7.75%.
- The amount of interest earned is taxable at the rate of 30% in India.
Fixed deposit in FCNR account
- Foreign Currency Non-Resident account
- Deposits in FCNR can be made in foreign currency and withdrawals are also made in foreign currency. And, hence there is no risk of conversion loss.
- The interest earned is tax-exempted in India.
2. Government Securities
- Government securities are also considered as safe NRIs Investments in India since they are backed by the government, as the name suggests.
- They are issued as bonds and treasury bills for a period of a few days to several years.
- The prices of government securities are tradeable and their prices fluctuate based on external factors.
3. National Pension Scheme (NPS)
- NPS is a pension scheme backed by the Indian government. Any NRI aged between 18 to 60 can open an online eNPS account using an Aadhaar card or PAN card.
- It allows you to choose asset allocation in equity, corporate bonds and government securities, with the maximum allowed allocation of 75% towards equity.
- The subscriber below the age of 60 is not allowed to withdraw more than 20% of the corpus. After the age of 60, the subscriber can withdraw 80% of the corpus and the remaining 20% is to be compulsorily contributed to buy an annuity plan.
4. Unit Linked Insurance Plan (ULIP)
- ULIP is an insurance cum investment plan. A part of the amount is invested towards insurance premiums and the rest in financial instruments.
- Generally, it has a lock-in period of 5 years.
- Premium paid towards the scheme and interest earned enjoy the status of tax exemption.
5. Real Estate
- Many NRIs invest in real estate in India to generate earnings by the way of letting out their owned space. There are multiple options for the investment to choose from including independent homes, apartments, villas, etc.
- Also, the real estate prices in major cities of India have raised in the last decade. Moreover, India is expected to witness major growth in the coming decade.
