All these are common questions haunting the minds of many NRIs. In this article you will get answers to all such questions. After you read this article, you will be able to a take a feasible decision with regards to investing in India.
How should NRIs invest in India | First thing to consider is why you want to invest in India?
This is an important question which must be treated with a suitable and viable answer/solution. It’s necessary for an NRI to clarify his/her stand on why he/she wants to invest in India. There can be many reasons. One may want to invest due to certain commitments like home loan EMIs or parental responsibility. The other may just want to grow his assets. This arises due to an emotional aspect known as home bias. It means that a person wants continue investing irrespective of the place of the world he resides. If overdone, this does not give any significant benefit only to find that your portfolio gets skewed in the end. Hence, first decide on the reason you want to invest in India.
Once you’re clear as to why you want to invest in India, you can move further and decide on which option will provide you with the most feasible solution.
How should NRIs invest in India | Various options available for NRIs to Invest in India-
- If the reason is certain commitments like discussed before then an NRE or Non Resident External Account fixed deposit is a good option. You can also opt for FCNR or Foreign Currency Non Resident option though which you can repatriate your money & get tax benefits also.
- If one wants to grow his assets then he is looking forward to invest in the equity market. For this person I would advise to go for equity mutual funds. However, opt for funds that are domiciled outside the country-India. This prevents you from adhering to strict laws which does not allow you to repatriate your money in other country if you want to.
- There are many offshore funds you can invest into. These are domiciled in many places of the world. Hence, they are legal & allow you to bring money back into India. This enables an NRI to benefit from the returns of the Indian market devoid of adhering to Indian laws. Offshore route is more advisable as NRIs can benefit from repatriability & tax exemptions.