As an NRI (Non-Resident Indian) living in the UK, you may be looking for investment options that can help you grow your wealth in India and achieve your financial goals. With the host of investment avenues available in India, it can be overwhelming to determine the best investment options for NRIs from the UK. Today, we will discuss some of the best NRI investment options available in India, including NRI mutual funds, fixed deposits, real estate, stocks, and many more, so that by the end of the blog, you will have a better understanding of the investment landscape in India and be equipped to make informed investment decisions that align with your financial objectives.
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Best Investment Options for NRIs from the UK
Given below are some of the best investment options for NRIs living in the UK:
1. NRI Mutual Funds
NRI Mutual funds can be a good investment option for NRIs in the UK who want to invest in India. NRIs in the UK may consider investing in mutual funds in India for several reasons:
- NRIs can diversify their investment portfolio by investing in mutual funds in India. Mutual funds invest in a variety of asset classes such as equity, debt, and gold, which can help reduce the overall risk of the portfolio.
- Mutual funds are managed by professional fund managers who have expertise in managing investments. NRIs who may not have the time or expertise to manage their investments can benefit from the professional management provided by mutual funds.
- Mutual funds in India have the potential to generate higher returns. While mutual funds carry a certain degree of risk, the returns can be substantial over the long-term, making them an attractive investment option for NRIs from the UK.
- NRIs investing in mutual funds in India can avail of tax benefits under the DTAA (Double Taxation Avoidance Agreement) between India and the UK. This can help NRIs reduce their tax liability in one of the countries.
- Investing in mutual funds is easy and convenient. NRIs can invest in mutual funds online from the comfort of their homes in the UK. Additionally, most mutual funds offer SIPs (Systematic Investment Plans) that allow investors to invest small amounts of money on a regular basis, making it easy to build a diversified investment portfolio.
- There are a plethora of mutual funds for NRIs from the UK to invest in India. They can choose to invest in any of them depending on their investment goals and risk tolerance.
How can NRIs in the UK Invest in Mutual Funds?
UK based NRIs can invest in mutual funds by following the below steps:
1. NRIs need to open an NRE/NRO/FCNR bank account to invest in mutual funds in India. These accounts can be opened with any Indian bank that offers NRI services.
2. NRIs must obtain a Permanent Account Number (PAN) card from the Indian Income Tax Department. The PAN card is required for all financial transactions in India.
3. NRIs must complete the KYC process with the mutual fund company they wish to invest in. This process involves submitting identity and address proofs, as well as other relevant documents.
4. NRIs can choose from a wide range of mutual funds in India. They can select a fund that aligns with their investment objectives, risk profile, and financial goals.
5. NRIs can invest in mutual funds in India through various channels, such as online investment portals and mobile apps like SBNRI app. They can also invest through their NRE/NRO/FCNR account.
2. Fixed Deposits
NRI Fixed Deposits are the most sought after medium for NRI Investments in India. There are several reasons why UK NRIs might consider investing in fixed deposits in India:
- Fixed deposits offer guaranteed returns on the invested amount, which makes it a low-risk investment option for NRIs.
- NRI fixed deposits, for example FCNR FDs, offer much higher interest rates than term deposits in other countries.
- Fixed deposits come with flexible tenure, ranging from a few months to several years. NRIs can choose tenure that suits their investment needs.
- NRIs are eligible for tax benefits on their fixed deposits in India, subject to certain conditions. For example, interest earned on NRE (Non-Resident External) and FCNR fixed deposits is tax-free in India.
- Funds in NRE/ FCNR fixed deposits can be fully and freely transferred outside India. However, there are restrictions on repatriation of NRO fixed deposits.
- UK based NRIs can open NRE/ NRO fixed deposit accounts in INR and FCNR deposits in any of the six currencies.
How can NRIs in the UK Invest in Fixed Deposits?
NRIs (Non-Resident Indians) based out of the UK can invest in fixed deposits by following these steps:
1. They can opt for Fixed Deposits by opening either of the 3 types of NRI Accounts that are NRE, NRO or FCNR accounts.
2. After opening the NRI account, NRIs can directly opt for a suitable Fixed Deposit online using their mobile phones under the type of account chosen.
3. They can then apply for the NRI fixed deposit account and submit the required documents.
3. Commercial Real Estate
- The Indian commercial real estate market has shown steady growth over years, and it has the potential for high capital appreciation in the long run.
- Rental yields in India are relatively high, which means that NRIs can earn a regular income from their property investments.
- Investing in Indian real estate can be a good way for UK NRIs to diversify their investment portfolio and reduce their overall investment risk.
- There are many commercial real estate investment companies that offer fractional ownership. In fractional ownership, investors pool their money together to purchase a property and share in the ownership and potential profits.
How can NRIs from the UK Invest in CRE?
NRIs in UK can invest in commercial real estate in India through the following ways:
1. NRIs can directly invest in commercial real estate in India by purchasing property in their name or in the name of a registered Indian entity. This can be done through inward remittances from abroad or through funds held in NRE/FCNR(B) accounts.
2. REITs (Real Estate Investment Trusts) are a type of investment vehicle that allow investors to invest in a portfolio of income-generating real estate properties. NRIs can invest in REITs listed on Indian stock exchanges.
3. Through fractional ownership, many retail investors can collect funds to purchase an expensive asset, say, Grade-A commercial property in tier -1 city. You can start investing with as low as Rs. 25 lakh investment amount. Each investor can own a part of the title and proportionate returns from rent depending on the investment in the asset.
UK based NRIs can invest in Indian stocks through PIS (Portfolio Investment Scheme) of the RBI. The PIS enables NRIs to purchase and sell shares and debentures of Indian companies on a repatriable or non-repatriable basis, subject to certain limits. Here are some key benefits of NRI investment in stocks:
- India has one of the fastest-growing economies in the world. This presents an attractive opportunity for investors to invest in stocks of companies that are likely to benefit from this growth.
- Investing in Indian stocks provides an opportunity for NRIs to diversify their investment portfolio, which can help reduce risk and potentially enhance returns.
- The Indian stock market has delivered attractive returns over the long term, which presents an opportunity for NRIs to earn higher returns compared to traditional investment options such as fixed deposits and bonds.
- Many of the top-performing companies in India are publicly traded, providing NRIs with an opportunity to invest in these companies and potentially benefit from their growth.
How can NRIs Invest in Stocks in India?
NRIs in the UK can invest in stocks in India through the following channels:
1. NRIs can invest in Indian stocks by opening a trading and demat account with a stockbroker in India. This requires an NRE/NRO account for remitting funds to India. NRIs can buy and sell stocks on the Indian stock exchanges through their trading account.
2. NRIs can also invest in Indian stocks through PIS, which is a scheme offered by the RBI to facilitate investments in Indian securities. NRIs need to open a PIS account with a designated bank and link it to their NRE/NRO account. The PIS account allows NRIs to buy and sell stocks on the Indian stock exchanges.
3. UK NRIs can also invest in Indian stocks through mutual funds. There are several mutual funds in India that invest in stocks, and NRIs can invest a lump sum amount or through SIP.
4. They can also invest in Indian stocks through ETFs that track the performance of the Indian stock market. These ETFs can be bought and sold on the stock exchanges like any other stock.
5. Bonds and Government Securities
There are several benefits of NRI investment in bonds and government securities, including:
- Bonds and government securities offer a regular income stream in the form of interest payments. This can be particularly beneficial for NRIs who may be looking for a stable source of income.
- Bonds and government securities are considered relatively safe investments, as they are backed by the Indian government. During periods of market volatility, bonds and government securities can provide NRIs with a sense of security.
- Investing in bonds and government securities provides an opportunity for NRIs to diversify their investment portfolio across different asset classes.
- Interest income earned on Indian government securities is tax-free in India, up to a certain limit. Additionally, NRIs may be eligible for tax benefits under the Double Taxation Avoidance Agreement (DTAA) between India and their country of residence.
- Indian government securities offer competitive returns compared to other fixed-income instruments, such as fixed deposits and savings accounts. This presents an opportunity for NRIs to earn higher returns on their investments.
How can NRIs Invest in Bonds and Government Securities?
UK NRIs (Non-Resident Indians) can invest in bonds and government securities in India through the following channels:
1. NRIs from the UK can invest directly in Indian government securities by opening a government securities account with a designated bank in India. They can transfer funds from their NRE/NRO account to the government securities account and purchase the securities.
2. UK NRIs can also invest in Indian bonds and government securities through mutual funds that invest in these instruments. They can invest in mutual funds through the PIS (Portfolio Investment Scheme) route or by directly investing in mutual funds.
3. NRIs can invest in Indian bonds and government securities through ETFs that track the performance of the Indian bond market. These ETFs can be bought and sold on the stock exchanges like any other stock.
To Sum Up
In conclusion, there are various investment options for NRIs in the UK to invest in India. It is important for NRIs to carefully evaluate their investment goals, risk tolerance, and investment horizon before investing in India. They also have to comply with certain regulatory requirements before investing in India. Seeking advice from a financial advisor or tax consultant can help NRIs navigate these requirements and understand the implications of investing in India as an NRI.
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