Manoj Negi
· 9,181 views
India is one of the fastest growing major economies in the world. When most of the countries are reeling under recession or economic slowdown, India is marching ahead with a faster growth rate. This makes India one of the hottest investment destinations for domestic and international investors. There are various investment options in India for NRIs living around the world. Here we will discuss top reasons for investing in India from USA.
Should you invest in India from USA?
Following are the some of the solid reasons for investing in India from USA:
- Safety of your investment: As per a Bloomberg Survey India has zero probability slipping into recession. Because of its demographic dividend, fiscal discipline, India is expected to grow at a rapid phase for the next couple of decades. India would be a better option in the long run.
- Better returns: Investors are getting better returns on their investments in the Indian market. This is the reason foreign investors are aggressively investing in India. In the financial year 2022, India received the highest annual FDI inflows of $84.835 billion, exceeding last year’s FDI by $2.87 billion.
- Higher rate of interest: NRI FD rates such as NRE, NRO and FCNR rates, are much higher up to 7.25% as compared to rates on certificate of deposits (CDs) – US equivalent of NRI fixed deposits. For example, the annual percentage yield (APY) of certificate deposits of the top five banks currently ranges from 0.02% – 1.01% for 3-year deposits. A CD with a 12-month maturity period offers rates at 0.02%-0.10%.Whereas FCNR deposits locked till 4 November with a 12-month maturity will offer a yield of 2.88%.
- Various options: There are a host of NRI investment options in India in the form of NRI mutual funds, fixed deposits, corporate FDs, direct equities, ETFs, government and corporate bonds, commercial real estate (CRE), VC funds, etc.
- Higher returns on real estate/ commercial property: With the new business model of fractional ownership in commercial real estate, investing in A-grade commercial properties has become pocket-friendly and simple with a minimum of Rs. 25 lakh investment. The rental yield from such properties ranges from 8% to 10% i.e. Rs. 2 lakh to Rs. 2.5 lakh per year for an investment of Rs. 25 lakh.
- Recurrent reforms: The US market is strictly regulated and gives priority to US citizens. The Government of India introduces several reforms time and again to simplify and promote foreign investment in India.
- Repatriation: NRIs can invest in the Indian market on a repatriation basis using their NRE or FCNR account. Investment on repatriation basis means an investment, the sale/ maturity proceeds of which are, net of taxes, eligible to be repatriated out of India.
- Scope for growth: Since India is a developing market, it has a lot more scope for development than developed markets. NRIs from the USA can invest in India to take advantage of its growth.
- Easy liquidity: There are assets that offer easy liquidity. For example, if you invest in the Indian stock market, it is easier to liquidate your funds whenever required. However, some financial instruments have a lock-in period and if you choose to withdraw funds, you may have to pay penalties.
Top 5 investment options in India for NRIs from USA
Here are some asset classes that US-based NRIs can invest in:
1. NRI Fixed deposits
Banks offer 3 types fixed deposits non-resident Indian:
- NRE fixed deposits: NRIs can open NRE fixed deposit accounts to keep their foreign savings (in USD) in Indian rupee. Check latest NRE FD rates.
- NRO fixed deposits: NRIs can keep their income generated in India, such as dividends, rental income, gift, etc. in an NRO account.
- FCNR deposits: Non-resident Indians can open an FCNR account to keep their foreign earnings in USD or any other foreign currency. It is a foreign currency account, so you don’t need to convert funds into INR and there is no risk of currency fluctuation.
2. Mutual funds
Mutual funds are one of the best investment options for NRIs to generate higher income, but only a few mutual fund houses offer mutual funds for NRIs from USA/Canada. Benefits of investing in mutual funds are:
- Power of compounding
- Above average liquidity
- Professionally managed funds
- Start with low minimum investment amount
- Flexibility
- Various types of mutual funds – debt funds, equity funds, hybrid funds, liquid funds, overnight funds, and a lot more.
Note: A Demat account is not mandatory for NRIs to invest in mutual funds in India. NRIs can download SBNRI App to choose from 3000+ mutual fund schemes in India or to ask any questions related to mutual fund investment.
3. Indian stocks
The Indian stock market has emerged as a destination for high growth Indian companies that can deliver potentially attractive returns over 3-5 years. Benefits are as under:
- Potential for very high returns
- High liquidity
- Passive income
4. Real estate
US based NRIs can invest in real estate in India. They can invest in both residential and commercial properties in India. However, NRIs are not allowed to buy any agricultural land/ farm house/ plantation property.
5. Pre-IPO
NRIs can buy and sell unlisted shares of a company that is yet to be listed on a public exchange. Pre-IPO shares can provide much higher returns than listed shares. Since they are less regulated, the investment in such assets is riskier. You must find a trusted intermediary when opting for such assets.
Final words
To ask any question related to investing in India from the USA, you can schedule a call by clicking the button below or download SBNRI App from the Google Play Store or App Store. You can also use the SBNRI app for investment in stock market/ mutual funds, NPS, Fixed Deposit, Pre-IPO, Asset Finance, Commercial Real Estate, Indian Startups Funds, NRI account opening, etc. To ask any questions, click on the button below. Also, visit our blog and YouTube channel for more details.
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- NRI Investment in India: 10 Investment Options for NRIs in India 2023
- Investment Options in India: NRI Investment in 2020-21
- How to start investing for beginners: Investment guide for NRIs
- Best Investment Options in India: Top 5 Picks of the year 2020
- investing in india from usa
- nri investment
- nri investment in india
9,181
I'm an avid enthusiast and expert in the realm of international investments, particularly with a focus on India's economic landscape. My comprehensive knowledge extends across various investment instruments, economic indicators, and global financial trends. Allow me to shed light on the concepts mentioned in the provided article authored by Manoj Negi:
1. India's Economic Growth:
- India's robust economic growth, even amidst global economic challenges, is attributed to factors such as demographic dividend and fiscal discipline. These elements contribute to a positive outlook for India's growth in the coming decades.
2. Investment Safety:
- The Bloomberg Survey's assertion of India having zero probability of slipping into a recession adds to the safety perception for investors. This is based on India's economic fundamentals and strategic policies.
3. Returns on Investment:
- India's attractiveness is underscored by the higher returns on investments. The article cites the highest annual FDI inflows in the financial year 2022, showcasing the confidence of foreign investors in the Indian market.
4. Interest Rates:
- The higher interest rates, especially in NRI fixed deposits like NRE, NRO, and FCNR, present a compelling reason for investment. The comparative rates with US equivalents, such as certificate deposits, highlight the potential for better returns.
5. Diverse Investment Options:
- The article outlines a plethora of investment options available to NRIs in India, including mutual funds, fixed deposits, direct equities, ETFs, government bonds, commercial real estate, and venture capital funds.
6. Real Estate Investment:
- A specific focus is given to real estate investment, particularly in commercial properties. The introduction of fractional ownership is highlighted as a pocket-friendly option with a potential rental yield of 8% to 10%.
7. Regulatory Reforms:
- The article emphasizes that the Indian government introduces reforms to simplify and promote foreign investment. This is in contrast to the strictly regulated US market, providing a more favorable environment for investors.
8. Repatriation:
- NRIs can invest in India on a repatriation basis, using accounts like NRE or FCNR, allowing for the repatriation of investment proceeds out of India.
9. Growth Potential:
- India's developing market is highlighted as having significant growth potential, offering NRIs an opportunity to capitalize on this growth.
10. Liquidity:
- The liquidity aspect is addressed, noting that assets like those in the Indian stock market offer easy liquidity, providing flexibility for investors.
11. Top 5 Investment Options for NRIs:
- The article lists specific investment classes for US-based NRIs, including NRI fixed deposits, mutual funds, Indian stocks, real estate, and pre-IPO investments.
In conclusion, the article serves as a comprehensive guide for NRIs from the USA looking to invest in India, covering various facets of the Indian investment landscape and providing insights into the diverse options available. If you have any specific questions or require further clarification on these topics, feel free to ask.
