NRI Investment Plans in India

There are several investment plans available for Non-Resident Indians (NRIs) in India. Financial planning for NRIs is more or less similar to that of resident Indians albeit with some points of difference. Knowing about these can lead to making the right choice, and money well invested back home for those who are not living here, presently. Those who want to make the most of the money invested in the country need to find appropriate financial advisors for managing it and helping it to grow.

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There has been a spurt in the NRI investment in recent times owing to the global economic downturns. Indians working abroad are suddenly feeling insecure about their jobs and investment options available on foreign shores. 

In this scenario, an ideal option is to go for a selection of an ideal investment plan that provides complete financial security and big returns. Some of the investment options ideals for NRI include secondary market equity shares, public new issues or shares, mutual funds through inward remittance or via CNR/NRE/NRO accounts, bank deposits, and NRO domestic funds, through partnership concerns and bonds, as well as immovable property. 

Simply making decisions regarding investment in India is not enough. One needs to find that perfect investment option for getting the maximum possible returns. The points to consider include investment plan, account for investment, the amount for investment, and related applicable taxes.

However, before getting to know about these plans let us first have a brief introduction about who is an NRI.

Non-Resident Indians (NRIs)

As per Indian law, an NRI (Non-Resident Indian) is a person who was born in Indian territory but now lives outside India.

An Indian Resident Is a Person Who

  • Has been living in India since birth

  • Has lived in the previous financial year in India for 182 days

  • Has lived for at least 60 days in that year specifically

  • Or has been in India for 365 days straight in the preceding four years

These are the criteria’s for ‘Indian Resident' and a person who does not fulfill the mentioned conditions are considered a Non-Resident Indian and is treated in the same way for paying the income tax as an NRI.

Here are some of the NRI investment options in India to choose from.

Investment Plans for NRIsInvestment Plans for NRIs

Best Investment Options for NRIs in India

Here are some best investment options for Non-Resident Indians who are planning to invest in India.

  1. Fixed Deposits

    Not just for the citizens of India, fixed deposits are quite common for the Non-Residents Indians as well. Directly depositing in banks is one of the safest options and hence is considered the most famous one. The Non-Resident Indian can deposit their money in India through one of the following accounts:

    • Fixed Deposit in NRE Account (Non-Resident External Account)

    • Fixed Deposit in NRO Account (Non-Resident Ordinary Account)

    • Fixed Deposit in FCNR Account (Foreign Currency Non-Resident Account)

  2. National Pension Scheme

    One more reliable source of investment could be the National Pension Scheme. It is a completely government-backed scheme that lets the Non-Resident Indians invest in either equity, debts or a combination of both.

    A National Pension Scheme is for individuals between the age of 18 years to 60 years and can be opened with minimal documents like Aadhaar and PAN card.

    Non-Resident External Account and Non-Resident Ordinary Account are generally used while investing in National Pension Scheme.

    Under National Pension Scheme, you can go for either:

    1. Active Choice

      Where the asset is allocated in between

      • Equity

      • Corporate Bonds

      • Government Securities

      While selecting an active choice, 75% (maximum) can be allocated in Equity.

    2. Auto Choice

      Asset allocated completely depends upon the age of the Non-Resident Indian.

      Auto means that the assets are allocated automatically and cannot be decided by the investor.

    Investment Plans for NRIsInvestment Plans for NRIs
  3. Mutual Funds

    Mutual Funds are gaining rapid popularity these days. NRIs with limited expertise in foreign investment can surely opt for mutual funds for better returns. It is important to understand the nature of mutual funds and whether they are open for Canada or USA NRIs before making any kind of investment. Checking of rules for house parties is another important criterion.

    Foreign Exchange Management Act (FEMA), 1999 governs the Non-Resident Indian mutual fund investments. NRIs, as per the government rule, can make investments in the following capital markets in India:

    • Direct stocks,

    • Mutual funds,

    • Exchange-traded funds.

    Mutual fund investments are subject to market risk and are a little riskier as compared to fixed deposits or national pension schemes. An NRI should select funds as per their risk profile and financial objectives.

    Key points under Non-Resident Indian investment in Mutual Funds are as follows:

    • Money can be invested through Non-Resident External Account

    • Money can be invested through Non-Resident Ordinary Account

    • Money can be invested only in Indian National Currency only and not in foreign currency

  4. Real Estate

    Real estate prices have increased immensely over time. It is very convenient for Non-Resident Indians to buy property in India and put it out on rent for some extra income. Real estate is a decent source of investment as it offers good long-term returns along with steady growth over a period.

    Bank accounts to be used by Non-Resident Indians to buy or sell a property in India are as follows:

    • Non-Resident External Account

    • Non-Resident Ordinary Account

    • Foreign Currency Non-Resident Account

  5. Public Provident Fund

    A Public Provident Fund (PPF) account investment is a completely secure and government-backed investment for NRIs. An Indian resident can anytime opt for a PPF account and start their investment. On the contrary, if an NRI does not have an existing PPF account, he/she cannot avail of benefits under this scheme. After 15 years of the designated maturity period under the PPF Account for NRIs, they cannot further extend their Public Provident Fund Account under any circumstance.

  6. Equity Investments

    In case an NRI is an aggressive investor, then investing in equity is an ideal investment option. The NRIs can easily invest in the stock market of India within the portfolio investment scheme of the Reserve Bank of India.

    Bank accounts used for equity investments by Non-Resident Indians are as follows:

    • Non-Resident External Account

    • Non-Resident Ordinary Account

    • Demat Account

    • Trading Account to invest in the stock market in India

  7. ULIP Plans

    Under the Foreign Exchange Management Act (FEMA), NRIs (Non-Resident Indians) have all the rights to invest in ULIPs (Unit Linked Insurance Plans) just like any other Indian resident. It is considered as one of the most popular as well as the reliable options of investment.

    The key highlight of ULIPs is that they come with a dual benefit of investment plus insurance which ultimately helps in the creation of wealth if invested wisely for the long term. Another reason for NRI’s attraction towards investment in ULIPs is the availability of tax benefits. The premiums paid for ULIPs are deductible under Section 80C and 10(10D) of the Income Tax Act, 1961.

    If an NRI (Non-Indian Resident) wishes to invest in Unit Linked Insurance Plan (ULIP), he/she can pay the premium through:

    • Any Indian bank account

    • Any NRE or NRO bank account

  8. Child Plans

    One of the best ways to secure your child’s future if you are an NRI (Non-Resident Indian) is to buy a Child Insurance plan. With great returns and regular savings, this type of plan guarantees a substantial corpus for your child back in your home country. Many private insurance providers and the Life Insurance Corporation of India (LIC) also offer child insurance plans. 

    Benefits Offered by a Child Insurance Plan

    Following are some of the benefits offered under the plan for NRIs:

    • It offers financial protection to your child to give him/her a comfortable and secure life.

    • Most child insurance plans come with dual benefits of insurance and investments. 

    • At the end of the policy term, these plans provide maturity benefit in the form of a lump sum amount.

    • These plans also offer the benefit of partial withdrawals. Wherein, a policyholder can use a part of their funds to meet their child’s urgent requirements.

Reasons Why Non-Resident Indian (NRI) Should Invest in India

Now that we know the best investment options for Non-Resident Indians (NRIs) in India, it is important to know the reasons why an NRI should consider investing in India. Here are some reasons why NRIs should go for Indian investments: 

  1. To Prepare for Their Retirement

    Getting ready for your old age, both financially and physically, should be on top priority for any individual. A person needs to invest their savings in different platforms to secure their future. The money that you save or invest for your future determines the quality of life that you will lead. So, for NRIs, it is much more important to secure their future as they are living in a foreign land and have to be fully safe and secure as they are far away from their close ones.

  2. To Get Good Returns

    Money invested in the right direction today will lead to more money in hand at the time of need. Whatever an NRI invests depending on his/her pocket, will lead to growth in India. Higher interest rates lead to more risk but also more profits, whereas low-interest rates substantially decrease the risk along with profit.

    It is highly recommended to invest carefully and take only the amount of risks that one can afford in the future.

  3. Money for The Family

    If an NRI (Non-Resident Indian) needs to send some money to their family back in India, extra NRI investments will come to his/her rescue at the hour of need. Even if an NRI earns enough in the country he/she lives in, an NRI investment will make sure to have some extra pounds in his/her pocket which can eventually help the family.

  4. To Build Financial Assets

    Right investments help you grow your financial wealth and eventually build up financial assets. For instance, if an NRI has enough money, he/she can look forward to buying a house in India. This house will lead to rental income or can also be used as security at the time of applying for any loan. Hence, an NRI investment can help you build financial assets that will surely help you in the long run.

Wrapping it up!

Investment opportunities are growing every past day due to the increase in globalization. Non-Resident Indians willing to invest their money in their home country have a lot more choices to select from these days as compared to the past. Investing in India comes with a wide range of options but it is advisable to understand the investment first before going forward.

One should keep in mind their finances and savings before investing. Also, it is important to understand the investment options before going forward with the investment.

What better option is to invest in the country where you lived once?

Invest to be secure in the future!

NRI Investment Plans in India FAQs

  • Q. Can an NRI invest in Post Office Scheme?

    Ans: A Non-Resident Indian cannot invest directly in a Post Office scheme in India. For investment in the Post Office scheme in India, an NRI has to have a joint account with a relative being a resident in India.
  • Q. Who regulates NRI Investments in India?

    Ans: Foreign investments are regulated under the Foreign Exchange Management Act (FEMA), 1999 by the Government of India.
  • Q. Is an NRI allowed to buy property in India?

    Ans: Yes, an NRI is allowed to acquire any commercial or residential property in India. NRIs can also acquire property in the form of a gift from any relative who is an Indian resident, or a fellow NRI.
  • Q. Is LIC Policy available for NRIs?

    Ans: Life Insurance Corporation of India has launched special plans and policies for NRIs after its successful and rising popularity amongst individuals.
  • Q. Is PAN Card compulsory for NRIs?

    Ans: PAN Card is necessary for Non-Resident Indians who have got a taxable income in India as per the Income Tax Act, 1961. PAN Card is also mandatory for share trading or investment in Mutual Funds according to the new rules by SEBI.
  • Q. Can NRIs invest in PPF?

    Ans: Yes, a Non-Resident Indian can have a PPF account and invest in it. A PPF Account however can be opened only when the individual was an Indian resident.
  • Q. Can NRIs invest in sovereign gold bonds?

    Ans: Even though investing in sovereign gold bonds is one of the safest options of investments, Non-Resident Indians are still not eligible for investment in the same.
  • Q. Can NRIs invest in liquid funds?

    Ans: Yes, an NRI can surely invest in Mutual Funds on a full non-repatriation or repatriation basis. However, completion of KYC is important for any kind of investment.

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