How and where to invest in India?

Non resident Indians or NRIs are looking more and more towards their home country to invest their money. NRI is defined as anybody who resides outside India for major part of the year because of his employment. Since 1950s, Indian economy has been growing steadily and investors from all over the world have expressed interest in taking advantage of this growth. After the reforms of 1990 with the commencement of the era of liberalization, India has become one of the favorite investment destinations of NRIs.


Why invest in India?

NRIs will find it beneficial to invest in India because of the following:

·         Since liberalization, regulations have been relaxed and scope for investment has increased significantly. Taxation policy now favors NRIs.

·         Indian economy shows steady growth based on real advancement. Unlike tax havens the growth of the country is based on tangible results and investors are likely to earn high returns.

·         The process of investing has become much easier as most transactions are now net based.

·         Many Indian banks provide necessary loans to NRIs like home loans.

·         Sentimental reasons are also active, especially for those who have close relatives living in India.

The procedure

In order to invest in India, the following steps will have to be taken:

·         If you decide to invest in mutual funds, then you will first have to select the fund house through which to invest. If you are living in USA, finding a good fund house may be difficult. This is because, according to US law, if a fund house has more than 15 clients residing in USA, it has to follow American regulations in addition to that of SEBI. Fund houses therefore avoid American residents to avoid this dual regulation. If you are living in any other country, you can choose your fund house easily. If you live in America, your choice will be restricted to only those fund houses which take American clients.

·         The next step is to open a NRE or NRO account through which you can carry out your investments.

·         Open a demat account with a broker of your choice – someone who can advise you regarding investment in India.

·         Keep track of the money. This can be difficult, especially if the portfolio is well diversified. A common practice is to confer power of attorney on a local representative.

·         Finally, keep in mind your tax obligations, both in India and the country where you are currently residing.

In order to complete any of the steps, you must first obtain a PAN from India. As an NRI, this is offered at http://www.nripan.com/

Where to invest in India?

Now that you know broadly how to invest in India, you need to find out which market you should put your money in. the choices are as follows:

1.    You can open your own account in Indian banks as permitted by the Reserve Bank of India. Then these accounts can be used to invest in various savings and investment schemes. This option is particularly suitable for those who have blood relatives living in India like elderly parents because joint account holding is also permitted. In addition to saving and deposit schemes, this account can also be used to buy properties in India.

2.    NRIs can invest in various growth and long term investment options including mutual funds, shares, debentures, Government securities, National Savings Certificate and IPOs. However, you need to check the current regulations to know more about limit of investment, type of company etc.

3.    Finally, land and property are the best investment if you are looking for security. NRIs cannot buy agricultural land in India. However, you can buy houses, bungalows, flats and other properties – both private and for business.