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In the last few years, there is huge increase in investment opportunities for NRIs and Persons of India origin (PIO). Government of India has simplified rules and regulations applicable for NRI’s and encouraging them to invest in India. NRI’s are showing greater interest in investing in India. What are the investment options for NRI’s in India now ? What are rules and regulations applicable for them ?
Investment options for NRI’s in India now
Before we jump in to investment options available, we need to know that an NRI can invest his money in India through two routes. One is “automatic route” where no approvals from Govt are required and another is “Government route” where an NRI need to take approvals from Govt. of India before making any such investment.
Also NRI investment opportunities would also specify whether it is repatriation (amount can be transferred to origin) or not repatriation.
1) Investment in company shares and debentures: NRI’s can invest in shares and non convertible debentures of Indian companies through Portfolio Investment Scheme (PIS). PIS is a scheme of RBI. Once NRI opens this PIS account, he can buy or sell shares and debentures of Indian companies at designated stock exchanges. Currently there are various banks which are offering PIS accounts like ICICI Bank etc. However these investments have to be carried out as per FEMA guidelines. You need not apply for any fresh PAN card. Your existing PAN card would be sufficient to run the transactions of mutual funds or shares.
- The securities in which NRI can invest through automatic route includes agricultural sector, mining, power, industrial explosives, hazardous chemicals, pharmaceuticals, transportation, insurance, non banking financial institutions etc. No RBI approvals are required to invest in these securities.
- In some cases, the approval of FIPB (Foreign Investment Promotion Board) may be required. These include sectors like tea, infrastructure companies except telecom, media, courier services and single brand product retailing.
- Investment by NRI is prohibited in sectors like Retail, atomic energy, chit fund companies, nidhi companies, lottery and gambling, tobacco and other sectors which are not opened to private sector investment. Investment by NRI is prohibited in sectors like Retail, atomic energy, chit fund companies, nidhi companies, lottery and gambling, tobacco and other sectors which are not opened to private sector investment.
- You can look at best stocks to buy in India for 2013 to grow your investment in equity markets (Excluding the sectors prohibited for NRI’s).
2) Investment in mutual funds: Investment in mutual funds can be done by NRI’s only through NRI/NRO/FCNR account or through “inward remittance”. If you are looking for repatriation benefits, you should invest for at least 3 years period. However these investments have to be carried out as per FEMA guidelines. NRI’s can invest in top diversified mutual funds to benefit.
3) Investment in bank fixed deposits: NRI’s can deposit in bank fixed deposits at least for 3 year period if you are looking for repatriation benefits. However banks allow such deposits to be opened through FCNRB (Foreign currency Non-Resident Bank account). These accounts are maintained in US dollars, Pounds sterling etc. The funds in this account can be repatriated. Below are the best interest rates available currently for NRI’s.
- Development credit bank – 9.25% p.a.
- ING Vysya bank – 9.75% p.a.
- OBC – 9.10% p.a.
- Canara Bank – 9.05% p.a.
- Deutsche Bank – 9.00% p.a.
- SBH – 8.75% p.a.
- Kotak Bank – 8.75% p.a.
4) Investment in real estate: NRI’s can invest in residential and commercial properties without any approvals. However they cannot invest in agricultural lands or plantations.
5) Investment in Post office schemes: NRI’s CANNOT invest in any of the Indian post office schemes directly. However, they can open a joint account with a second person who is living in India and they can invest in a few post office schemes.
6) Investment in Bonds / Government securities: Investment in government securities or bonds is freely permitted to NRI’s. Such investment should be done for at least 3 years period. If such investments are purchased from NRE/FCNR account, the maturity proceeds can be repatriated. If purchased from NRO account, the maturity is credited to NRO account only and cannot be repatriated.
7) Investment in proprietary/partnership firms: NRI’s are permitted to make direct investment in proprietary concerns and partnership firms. However income through these cannot be repatriated outside India.
Conclusion: Though there are various investment options for NRI’s. However they may not be suitable for every NRI. Choose the best options suitable for you to maximize your returns.
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Best investment options for NRI’s in India now
Note: Since the NRI investments are subject to foreign exchange rules and regulations and some of them fall under purview of FEMA guidelines, NRI’s are adviced to take help from professionals who are well versed with these guidelines. Though your investment options may not change, you need to be clear about the formalities to be taken care before you invest in India. Happy investing NRI's 🙂
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