Discover the best 6 investment options for NRI in India that offer opportunities for wealth growth. As an NRI, you need to own a bank account because the funds that you have will be used from your bank to buy stocks. An NRI has 2 types of banks :
- NRE – Non-Resident External Account
- NRO – Non-Resident Ordinary
If you have an income in India in any form like rental, investing, or interest from fixed deposits then that will only be possible through an NRO account. This account allows you to receive funds in either Indian or foreign currency.
On the other hand, an NRE account can only accept foreign currency
Why investing in India is the best option for NRIs? If you are also thinking the same then your confusion will be cleared because :
- India is considered to have one of the youngest populations in the world. Therefore, they are highly likely to spend on their needs and wants. Due to this, they will become active customers of the company and the stock price of companies will increase along with their revenue.
- India is one of the fastest-growing major economies in the world.
- India is becoming a hub for innovation and technology.
- Investment in transportation, energy, and urban infrastructure can benefit from government support and contribute to long-term growth.
NRIs have a lot of options to invest in India. But before investing you should know about their benefits and risks.
These are the best 6 investment options for NRI in India:-
1) Direct Equity
NRIs can invest directly in stocks. Equity investments can beat inflation. To invest in stocks, it is very important to know the financial and stock market. Direct equity investment involves high risk. However, if you are ready to take more risk then direct equity investment will be the best option for you.
To invest in the Indian stock market, NRIs have to open a Portfolio Investment Scheme (PIS) account with the bank. The Portfolio Investment Scheme (PIS) account will be linked to the Demat account with a registered broker.
If the investment is sold within one year of purchase then applicable Income Tax will be 15% and if the investment is sold after one year of purchase then applicable income tax will be 10%.
2) Mutual Funds
Another very popular investment category is mutual fund. You should invest in a direct mutual fund plan rather than the regular plan. Zero Commission mutual fund aggregators provide the option to invest in all the mutual funds via a single platform. You can consider investing in the flexi-cap category where the fund manager divides the investment across large-cap, mid-cap, and small-cap based on the market condition. Please note that many mutual fund houses in India don’t allow NRIs to invest from USA and Canada.
They are less risky than direct equity investment because in mutual funds the fund manager invests your money.
Top AMC (Asset Management Companies) in India
| AMC | Asset Managed (as of 25th April 2024) |
| SBI Funds Management Ltd | 9,24,401.09 crores |
| ICICI Prudential Asset Management Company Ltd | 7,45,073.78 crores |
| HDFC Asset Management Co Ltd | 6,15,416.23 crores |
| Nippon Life India Asset Management Ltd | 4,39,323.17 crores |
| Kotak Mahindra Asset Management Co Ltd | 4,00,943.86 crores |
| Aditya Birla Sun Life AMC Ltd | 3,42,544.58 crores |
| Axis Asset Management Company Ltd | 2,72,563.17 crores |
| UTI Asset Management Co Ltd | 2,69,940.77 crores |
| Mirae Asset Investment Managers (India) Pvt Ltd | 1,62,220.81 crores |
Tax Implications in Mutual Funds for NRI
| Fund Type | Holding | Tax |
| Equity fund | Less than 1 year | 15% |
| Equity fund | More than 1 year | 10% for over ₹1,00,000 |
| Non-equity | More than 3 years | 20% |
| Non-equity | Less than 3 years | 30% |
3) National Pension Scheme
National Pension Scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Investment in the National Pension Scheme for NRIs can be done either through the NPS website or through any bank which allows NRIs to open an NPS account in their name. Its objective is to create income security during retirement and is specially designed for long-term wealth creation.
Eligibility Criteria for NPS
- Age:- 18 – 60 years
- PAN Card
- Valid Bank Account, either NRE or NRO.
- NRIs are allowed to open only Tier 1 NPS accounts.
While investing in NPS, you also have to choose the fund manager who will manage your investment. Pension Fund Regulatory and Development Authority (PFRDA) has appointed 7 Pension Fund Managers. If you are not satisfied with any fund manager during the time period of NPS, then you can also change it. There are two types of investment modes in the National Pension Scheme, active and auto. In active mode, you have to select the funds and percentage of allocation yourself.
But in auto mode, you just have to choose your risk profile and then your investment will be automatically adjusted based on the risk profile. NRI Pension scheme allows you to appoint up to 3 nominees. To keep the tier 1 account active, you will have to contribute at least ₹ 500 every month until maturity. Investment into the scheme is allowed up to Rs. 1.5 lakhs as a deduction under Section 80CCD (1) from the taxable income of NRIs.
4) Real Estate
It is predicted that India’s real estate sector will be worth $ 650 billion by 2025. Indian real estate is an important investing destination for most NRIs. NRI can buy both commercial and residential properties. However, they are not allowed to invest in farms, plantations, and agricultural land.
An Indian resident or a person who is not permitted to invest in a property in India cannot become the joint holder in any such property. NRIs should have an authorized NRI bank account in India.
TDS on sale of property
| Time Period | Gains | TDS |
| Less than 2 years of purchase | Short-term capital gains | 30% |
| More than 2 years of purchase | Long-term capital gains | 20% |
5) Fixed Deposit in NRO Account
NRI can also invest their money in fixed deposits. Fixed deposits allow NRIs to deposit their money for a pre-determined duration to earn a fixed rate of interest. Fixed Deposit is a safe and secure investment option.
- Interest in the NRO account is taxable in India and the tax is computed at 30% of the interest earned.
- Interest is repatriable but the transfer of principal amount comes with certain limits.
- Can be held with two or more NRIs/PIOs.
- Power of Attorney is permitted.
NRO Fixed Deposit Interest Rates
| Bank | Tenure | Interest Rate (as on 25th April,2024) |
| Federal Bank | 7 days – Above 5 years | 3.00% to 7.40% |
| HDFC Bank | 7 days – 10 years | 3.00% to 7.20% |
| Axis Bank | 7 days – 10 years | 3.00% to 7.10% |
| State Bank of India | 7 days – 10 years | 3.00% to 7.10% |
Documents Required to Open an NRI FD Account
- Self-attested copy of passport
- Work Permit/ Employment Visa, Residence Visa/ Residence Permit
- Address Proof
6) Fixed Deposit in NRE Account
You can open a NRE account in India as an NRI. Interest earned in an NRE account is tax-free in India. NRE account is maintained in Indian Rupee. It Can be held with two or more NRIs/PIOs. And Power of Attorney is permitted. Principal and interest earned are freely repatriable.
NRE Fixed Deposit Interest Rates
| Bank | Tenure | Interest Rate (as on 25th April, 2024) |
| Federal Bank | 1 year – Above 5 years | 6.80% – 7.40% |
| HDFC Bank | 1 year – 10 years | 6.60% – 7.20% |
| State Bank of India | 1 year – 10 years | 6.80% – 7.10% |
| Axis Bank | 1 year – 10 years | 6.70% – 7.10% |
