what are the best options for nris to invest in india?

can a non-resident indian (nri) invest in india? yes, an nri can invest in india. the only things they will have to be watchful of are the rules and tax liabilities. rules for investment and the tax liabilities on such investments can be different from those for resident indians.

let's take a look at some of the possible investment options for nris in india.

real estate

real estate has been an appreciating investment for years now and forms one of india's cornerstones of any investment portfolio. but there are rules to be followed. for example, nris can buy property in india but not agricultural land or farmhouses. nris in certain countries like china, pakistan, burma, bhutan, nepal, iran, afghanistan, or sri lanka will need to get permission from the rbi before investing in any real estate in india.

fixed deposits

nris can open fixed deposits in banks and nbfc (non-banking financial companies) in india. they can invest in fds through nre, nro or fcnr deposits. in the case of fcnr (foreign currency non-repatriable), deposits can be made in foreign currencies as opposed to nre or nro deposits, where deposits must be in inr only. nre fd accounts are tax-free, and nro accounts allow nris to earn interest at the published rates. the interest rate can range from 0.01-7.10%, depending on the tenure, deposit type, and prevailing interest rates.

mutual funds

nris are allowed to invest in mutual funds in india. however, along with the regular kyc, they will also need to provide a firc (foreign inward remittance certificate). withdrawals can be credited to either a bank account or an nre/nro fixed deposit. in terms of taxes, long and short term capital gain taxes apply, ranging from 10-15% for equity investments and 10-30% for debt fund investments.

stock markets

while investing in stock markets is permitted for nris, there are a few restrictions. nirs can't buy more than 10% of the paid-up capital of the company. they also can't invest in commodities, currencies, and certain stocks as mandated by the rbi. when it comes to holding the positions, they can also not indulge in intraday trading.

national pension scheme

nris can invest in the national pension scheme as well. they can register for nps online using aadhaar cards or a pan. like resident indians, nris will also need to make a minimum investment of ₹ 500 when registering for nps. however, nris can invest only in the nps tier i scheme since investment in the tier ii schemes is reserved only for resident indians.

public provident fund

while nris can invest in nps, investing in public provident funds isn't exactly as easy as investing in nps. they can have a ppf account if it was opened when they were resident indians, but their interest will be reduced from its actual rate to that of a post office savings account and may be reviewed and changed by the government from time to time. the maturity will be limited to 15 years, and extensions won't be allowed. the returns can be calculated using a ppf maturity calculator. the ppf return calculator can show you what the maturity amount of your ppf investment will be.

a diversified investment portfolio is the key to healthy investing in india, especially for nris. the key is to ensure there is a balance between safe and aggressive growth. while nps, fixed deposits and ppf offer safer avenues of investment, real estate, stock markets, and mutual funds will offer more aggressive investment opportunities.