It’s very common among people from less-privileged countries to look for greener pastures abroad and the same holds true in the case of Indians as well. The reason could be either better financial prospects, higher studies or to establish a business. Eventually, they get settled in their newly adopted foreign countries. However, for investment purposes, India comes across as a good destination due to the low currency value and the overall affordability factor. Hence, we will look at the ideal avenues in India where NRIs can invest apart from real estate.
Fixed Deposits (FD)
This happens to be the most preferred form of investment for the NRIs. To begin with, they are required to open an NRE account i.e. Non-Resident External account. The account is meant for NRIs, who have invested either in fixed deposits or term deposits. In this, the principal amount gets attached to the account and the NRIs are expected to fetch around 7% to 9% interest rate annually. The good news is that it is beyond the realm of taxation.
The stock market is another good option for NRIs to invest in. They are permitted to purchase a few shares published by the RBI. This type of investment falls under the category of the Portfolio Investment Scheme put in place by the RBI. Despite being a direct investment, NRIs can operate only via stockbrokers registered with the Securities and Exchange Board of India (SEBI).
Before investing, they must obtain the nod to operate their shares. They are also required to hold three kinds of accounts, a bank account, which could either be an NRE account or an NRO account, a Demat account (for the shares) and a trading account that can be held with the SEBI-approved firm.
The other favourite option for NRIs investments happens to be a business venture. He or she can invest in a venture along with an Indian or an NRI partner. Over here, NRIs are not bound by any regulations of the Government of India. However, they have to pay corporate tax to the government which would be in the vicinity of 30%-40%. For NRIs to initiate business operations in India, they must have an Indian citizen as the partner, whether it is a private limited firm or a public limited one.
National Pension Scheme
This is also a very good investment vehicle for NRIs, however, they must have their Indian citizenships intact for this. There are two types of schemes over here: Tier 1 and Tier 2. In case, a person in the age bracket of 18-60 years puts his or her money in the NPS and wants to keep the same in operation till retirement, then he/she should choose Tier 1 scheme. However, in Tier 1 and Tier 2 schemes, the bond can be dissolved anytime post making the entire contribution. In the Tier 2 scheme yearly contribution of Rs. 2000 is required and In Tier 1 annual contribution of Rs. 6000 is needed. Finally, once the bond period expires, 40% annuity is given and 60% of the total account balance is provided as a lump sum amount.