In this article, you will understand different NRI investment options that can be considered while planning to Invest in India.
Best Investment Plans†† in India to Invest in 2026~
Here is the list of best investment plans in India:
Disclaimer: †† Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is done in alphabetical order (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
Best Investment Options for NRIs in India~
Here are some of the best NRI investment options in India:
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Unit Linked Insurance Plans (ULIPs)
ULIPs, or Unit Linked Insurance Plans, combine insurance and investment benefits, making them advantageous for NRIs seeking moderate to high-risk investments in India.
Benefits include:
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5-year lock-in period for future savings.
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Partial withdrawals post-lock-in period.
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Tax exemptions under Sections 80C and 10(10D) of the Income Tax Act, 1961 for NRIs.
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Easy fund switching.
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Portfolio diversification.
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Premium redirection flexibility.
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Guaranteed sum assured for nominee in case of investor's demise.
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Long-term benefits with high returns.
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Capital Guarantee Solution Plan
The capital guarantee plan is a secure investment option for NRIs seeking stable returns in India.
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It protects the principal from economic downturns, with the fund company absorbing losses.
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50-60% of the investment is allocated to debt for capital protection, with the remainder in equity.
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Tailored for NRIs, it features a 10-year policy tenure and a 5-year premium-paying tenure.
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Upon maturity, investors receive the full premium along with additional benefits.
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Retirement Plans
Retirement plans for NRIs are investment options in India specially designed to safeguard an investor's future after retirement. Retirement plans help create a financial corpus and aim to secure a financial future post-retirement, ensuring a comfortable lifestyle without active income.
There are 2 types of retirement plans:
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Pension plans
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Annuity plans
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Pension Plans:
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Purpose: Income source post-retirement.
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Saving Strategy: Regular contributions during earning years.
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Benefit: Stable retirement life.
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Inflation Protection: Designed to shield returns from inflation for maximum NRI returns.
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Annuity Plans:
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Function: Offers regular payouts throughout post-retirement life.
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Accumulation Phase: Utilize accumulated funds from pension plans systematically.
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Post-Retirement: Purchase an annuity plan for consistent paybacks.
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Policy Adherence: Regular payouts in accordance with plan policies.
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Guaranteed Returns Traditional Plans
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Guaranteed Returns Traditional Plans, favored by NRIs investing in India, involve investing a fixed sum for a specified period.
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These plans assure NRIs of predetermined returns, unaffected by market fluctuations.
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They offer stability and assurance to NRIs seeking secure returns in the Indian financial market.
Child Plan
With India's flourishing economy, NRIs are increasingly favoring investments in the country for higher growth prospects. A child plan emerges as one of the best investment options in India for NRIs, offering the dual benefits of insurance and investment. It shields your child from unexpected events, providing financial security, while enabling fund accumulation through diverse investment avenues for a secure future.
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National Pension Scheme
The National Pension Scheme (NPS) is a voluntary retirement savings program in India, aimed at providing individuals with a pension after retirement. Launched by the Government of India, it promotes systematic savings during working years for financial security in retirement. NPS is considered the best NRI investment in India and is open to both Indian residents and NRIs.
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Mutual Funds
Mutual funds are investment vehicles that pool money from multiple investors to collectively invest in a diversified portfolio of stocks, bonds, or other securities. Professional fund managers or investment firms manage these funds. Mutual funds provide individual investors, including those exploring NRI investment in India, with an opportunity to invest in a diversified and professionally managed portfolio, even with relatively small amounts of money.
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Fixed Deposits
Fixed deposits, or FDs, are financial tools provided by banks and financial institutions. They involve depositing a set sum for a fixed period at a fixed interest rate. In return, the institution pays interest periodically and returns the principal at the end of the term. FDs are a low-risk option, making them an attractive choice for NRI investments in India.
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Real Estate
With real estate prices soaring, Non-Resident Indians find it profitable to invest in Indian properties for additional income. Real estate stands as a favorable investment avenue for NRIs, offering promising long-term returns and consistent growth.
Bank accounts to be used by Non-Resident Indians to buy or sell a property in India are as follows:
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Non-Resident External Account
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Non-Resident Ordinary Account
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Foreign Currency Non-Resident Account
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Equity Investments
If an NRI is an aggressive investor, investing in equity is an ideal investment option. The NRIs can easily invest in India's stock market within the portfolio investment scheme of the Reserve Bank of India.
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Portfolio Management Services (PMS)
Portfolio Management Services (PMS) is a specialized investment service designed for high-net-worth NRIs seeking to optimize their investments in India. It involves assigning a professional fund manager to oversee the client's portfolio, aligning with their goals and risk preferences.
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Public Provident Fund or PPF
PPF, or Public Provident Fund, is a favored long-term savings option provided by the Indian government. It encourages NRI residents to save and invest by allowing them to open accounts with authorized banks or post offices and contribute annually. Contributions qualify for tax deductions under Section 80C of the Income Tax Act.
Taxation on Investment Plans for NRIs Based in The UK
UK-based NRIs can invest in the Indian market; however, subject to taxation rules of both India and the UK. The India-UK double taxation avoidance agreement allows the investor to reap certain tax benefits, but it is recommended to educate oneself on the taxation rules to ensure that your returns are not taxed in excess.
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Taxation in India (Source Country)
- Bank accounts: To invest in the Indian market, it is essential for you to have a Non-Resident Existing (NRE) or Non-Resident Ordinary (NRO) account. Any interest accrued on an NRE account is completely tax-free, while an NRO account is subject to 30% TDS. Note that the TDS in an NRO account is capped at 15% under the India-UK DTAA.
- Dividends earned from Indian shares and mutual funds: NRIs are taxed at 20% plus surcharge and cess on dividends. Article 11 of the India-UK DTAA caps this rate at 10%. The dividends earned from a property investment or REITs are taxed at 15% under the DTAA.
- Capital gains: The India-UK DTAA has no cap rate on capital gains
- Any gains from equity-oriented mutual funds are taxed as capital gains at 20% STCG and 12.5% LTCG for gains above ₹1.25 lakh.
- Any gains from debt-oriented mutual funds are taxed at your income tax slab rate if held for the short term. If held for a period of more than 12 months, the gains are taxed at 12.5% without indexation.
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Taxation in the UK (Country of Residence)
HMRC taxes residents on their worldwide income on an arising basis, which means that the income is taxed as they occur, regardless of if they have been transferred into an account in the UK.
Bank accounts: Any interest earned on your NRE accounts is completely taxable in the UK at your marginal rate of 20%, 40%, or 45%. NRO accounts are also fully taxable in the UK at your marginal rate. You can claim a foreign tax credit on the tax paid in India through a UK Self Assessment SA106.
Capital Gains: Any capital gains earned in India are taxed at standard UK capital gains tax at 18% or 24% as per your tax bracket. To avoid double taxation, you can declare your gains on UK Form SA108 and claim a foreign tax credit on Form SA106. Under the DTAA, you will have to pay the higher of the two countries' tax rates rather than both.
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Foreign Income Gains(FIG) Regime
As of 6 April 2025, if you are a new arrival in the UK, you can claim 0% UK tax on all your foreign income, including any interest earned on the NRO or NRE accounts for the first four tax years. You are also eligible to transfer the money into the UK fully free of taxes. However, it is important to note that if you claim FIG, you forfeit your UK personal allowance and annual CGT exemption.
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Worldwide Inheritance Tax
Along with the FIG regime, the IHT, also applicable since April 6 2025, tests residency rather than domicile for estate tax. Under IHT, if you have been a resident of the UK for at least 10 of the previous 20 tax years, any estate owned by you throughout the world, including all India-based financial assets, falls into the 40% UK inheritance tax net.
Reasons Why Non-Resident Indians (NRIs) Should Invest in India
India's rapidly growing economy presents attractive investment opportunities for NRIs. With a thriving entrepreneurial ecosystem, expanding consumer markets, and government initiatives to boost infrastructure and industries, investing in India can capitalize on the country's economic growth greatly. Here are some reasons why NRIs should invest in India:
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Retirement Preparation: Investing in NRI options in India ensures financial security during retirement.
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Good Returns: NRI investment options in India offer potential growth and returns.
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Family Support: Investments in India serve as a financial safety net for families.
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Portfolio Growth: NRI investments help build financial assets like property and contribute to long-term stability.
Factors to Consider Before Investing in India as a UK NRI
While investing in the Indian market can seem attractive to NRIs based in the UK. It is essential for you to consider certain factors.
- Ensure you define your investment objective and whether your investment in India can fulfil it as per the timeline of your investment.
- Assess your risk appetite and consider investing in tools accordingly.
- It is essential for you to have a rupee-dominated account if you wish to invest in the indian market. You can choose between an NRO or an NRE account as per your source of Income.
- Before investing from either account, ensure you assess your repatriation needs, as NRO accounts cap overseas transfers at $1 million.
- Before investing in any Indian asset, ensure you go through the taxation rules governing both India and the UK to ensure that you are able to reap tax benefits under the India-UK DTAA. Note that claiming benefits under the DTAA can require a high amount of paperwork since the benefits are not automatic.
- Ensure you factor in INR/GBP currency fluctuations while investing or repatriating money from one account to another.
Wrapping it up!
Investment opportunities are growing every day due to the increase in globalisation. Non-resident Indians willing to invest their money in their home country have many more choices to select from these days than in the past. Investing in India comes with a wide range of options, but it is advisable to understand the investment before going forward.
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