NRI Investment Plans in India

Financial planning is of utmost importance in today's time, be it for an Indian Resident or an NRI (Non-Indian Resident). India's growing economy in the past two decades has attracted many Foreign Direct Investments (FDIs), and hence, NRIs have also started considering investing in India as one of the most viable options. There are several NRI investment options that can be considered while planning to invest.

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The Indian Government is opening more doors for NRIs (Non-Resident Indians) to invest in their home country and hence is coming up with vital options so that NRIs can diversify their global portfolio. But still, countries like the USA and Canada have some restrictions regarding NRIs investing their money.

In this article, you will understand different NRI investment options that can be considered while planning to Invest in India.

Best Investment Options for NRIs in India

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

  1. Unit Linked Insurance Plans (ULIPs)

    ULIPs or Unit Linked Insurance Plans are plans that include the benefits of both insurance and investment. This insurance plus investment plan helps in the creation of wealth as well as protects the family of the insured after their untimely demise. It is undoubtedly gaining huge popularity these days and is considered one of the best sources of investment for moderate to high risk-taking investors.

    The investment amount in the ULIP is divided into 2 parts:

    • One part of the premium is to provide life insurance coverage.

    • The other part of the premium is used for investments in debt and equity funds to reap financial benefits.

    The amount invested in ULIP can be chosen as per the financial goal of the investor.

    Benefits of ULIPs

    • It is an investment plus insurance plan.

    • No other plan in India serves a dual purpose for the investor.

    • Generally, it comes with a 5-year lock-in period that helps save money for the future.

    • Partial withdrawals can be made after the completion of the lock-in period.

    • Offers tax exemptions under the Income Tax Act, 1961.

    • Offers easy switching between funds facility to investors.

    • Allows diversification in the investor's portfolio that helps them in the future.

    • Flexibility to redirect future premiums to funds of the investor's choice.

    • A guaranteed sum assured is provided to the nominee in case of the untimely death of the investor.

    • Provides long-term benefits along with high returns.

  2. Capital Guarantee Solution Plan

    The capital guarantee plan is an investment that focuses on safeguarding the investor's principal from any losses during economic downturns. Under the capital guarantee fund, the fund company absorbs any losses experienced by the underlying investment. Capital Guarantee Plans are basically ULIP plans that are a combination of insurance and investment. Under this plan, 50-60% of the amount invested goes into debt for capital protection, and the rest is invested in equity. The plan comes with a policy tenure of 10 years and a premium paying tenure of 5 years.

    The significant advantage of the capital guarantee plan is that on the maturity of the policy, the full premium is returned along with the additional benefits made by the product. The capital gain funds thus aim to invest majorly in conservative instruments to help minimize the probability of losses and offer guaranteed returns.

  3. Retirement Plans

    Retirement plans, in general, are policies and plans specially designed to safeguard an investor's future after retirement. Retirement plans help in creating a financial corpus for an investor, ensuring that they maintain a particular lifestyle, even after they have stopped earning.

    There are 2 types of retirement plans available in the market:

    • Pension plans

    • Annuity plans

    Pension Plans

    Pension is a source of income after retirement when an individual cannot earn regular monthly income for themselves. Pension plans allow the investor to save money regularly during the earning years to have a stable retirement life. Pension plans are designed in such a way that inflation does not affect the returns, hence allowing maximum returns to the investors.

    Annuity Plans

    Annuity plans offer regular payouts to the investors for the rest of their life after retirement. Pension plans provide accumulated phase to the investor, which can be systematically put in a policy regularly. After retirement, an annuity plan can be bought with these accumulated funds that provides regular paybacks as per the plan's policies.

    Investment Plans for NRIsInvestment Plans for NRIs
  4. Guaranteed Returns Traditional Plans

    Guaranteed returns traditional plans are one of the most vanilla and oldest forms of insurance plan that comes with the following benefits:

    • Guaranteed fixed returns

    • Complete risk coverage

    • Life protection

    • Tax deduction benefits

    Guaranteed return traditional plans are highly-suited for investors not having a considerable risk appetite. Total Sum Assured + Vested or Guaranteed Bonus is provided to the investor at the time of maturity of the plan. The highlighted feature of the Traditional Plans is that the investor is not directly linked to the market and hence, only has to enjoy maximum returns provided by the plans without thinking about market fluctuation.

  5. Child Plan

    Due to massive economic growth in India, more Non-Resident Indians (NRIs) are willing to invest their money here for better growth. A child plan is one way of making investments in India and safeguarding your child's future.

    A child plan is a combination of insurance and investment under one roof. The insurance part helps in protecting your child against any unforeseen event, such as your untimely demise. In addition, it ensures that your child receives a fixed annual payment from your insurer, as per the terms and conditions of your policy.

    On the other hand, the investment component helps in fund accumulation through investment in various financial instruments. These instruments include equities, debt bonds, etc.

  6. 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:

    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.

    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 to be the investor.

  7. Mutual Funds

    Mutual Funds are safer and more option as compared to direct equity and are gaining rapid popularity these days. NRIs with limited expertise in foreign investment can surely opt for mutual funds for better returns. However, 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. Therefore, 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 a Non-Resident Ordinary Account

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

  8. 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 is considered the most famous. The Non-Resident Indians 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)

    For better returns than FDs, an NRI can also opt for an all-new "Max Life Smart Fixed-Return Digital Plan" that offers a combination of higher fixed returns, life coverage, and tax savings, making it a preferred choice for investors looking for guaranteed fixed returns.

    Some of the main highlights of the plan are:

    • Guaranteed returns as high as 6.5%, payable as a lump sum at maturity.

    • Tax saving benefits on the premiums and tax-free maturity benefits.

    • A loan can be availed in case of financial emergencies.

    • Insured can select the life insurance coverage as per their financial requirement.

    • Additional 0.25% maturity benefits are available for a policy term of 5 years.

    • Additional 0.50% maturity benefits are available for a policy term of 10 years.

  9. Real Estate

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

    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

  10. 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 India's stock market 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

Investment Plans for NRIsInvestment Plans for NRIs

Reasons Why Non-Resident Indians (NRIs) Should Invest

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 actually consider investing in India. Here are some reasons why NRIs should go for Indian investments for better returns and a safer future: 

  1. To Prepare for Their Retirement

    Getting ready for your old age, both financially and physically, should be on top priority for any individual. People must invest their savings in different platforms to secure their future. The money that you save or invest for your future will determine the quality of life that you will lead. So, it is much more important for NRIs to secure their future as they live 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 their pocket will lead to growth in India. Higher interest rates lead to more risk and profits, whereas low-interest rates substantially decrease the risk and profit.

    It is highly recommended for investors to invest carefully and take only the amount of risks they 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 your rescue in the hour of need. So even if you earn enough in your country, an NRI investment will ensure you have some extra pounds in your pocket, which can eventually help your family.

  4. To Build Financial Assets

    Suitable investments help you grow your financial wealth and eventually build up financial assets. For instance, if an NRI has enough money, they can look forward to buying a house in India. This house will lead to rental income or can also be used as security when 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 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.

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 is a better option 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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