A Non-Resident Indian (NRI) is an Indian citizen who has lived outside India for more than 183 days in a financial year (April 1 to March 31). While you retain your Indian citizenship, your tax and banking status change. You’re generally taxed only on income earned or accrued in India. As an NRI, you also gain access to special investment accounts and instruments in India, making it easy to grow your wealth back home. Today let’s discuss the best investment options for NRIs, in detail! But before that..
Why Should NRIs Invest in India?
India offers a unique mix of emotional and financial incentives for NRIs looking to build long-term wealth. Here’s why it makes sense:
Retirement Planning
India is still a preferred retirement destination for many NRIs. Lower cost of living, familiar culture, and access to quality healthcare make it attractive. By investing early, you can accumulate a significant corpus in INR, ensuring a comfortable and self-sufficient life when you decide to return.
High Returns Potential
Compared to most developed countries, India offers significantly higher returns across many asset classes. Fixed deposits yield 7–9% annually, equity markets have historically delivered 12–15% CAGR, and real estate continues to appreciate in urban centers. When you convert your dollar or pound income into rupees, you’re already starting with more capital — giving you a natural edge.
Family Support
Whether it’s parents, children, or siblings — most NRIs want to support their families back home. Investing allows you to generate passive income that can go toward household expenses, medical care, or education for loved ones. Plus, it creates an emotional bond with your homeland.
Asset Building
By investing in real estate, mutual funds, or gold, you accumulate tangible or financial assets that appreciate over time. These assets can serve as emergency buffers, collateral for loans, or income sources when repatriating later in life.
Best NRI Investment Options in India (2025)
To make your decisions easier, we’ve divided investment options by risk category: Low, Medium, and High.
Low-Risk Options (Capital-Safe Investments)
1. Fixed Deposits (FDs)
Fixed Deposits remain one of the most preferred low-risk investment tools.
- NRE FD (Non-Resident External): Invest foreign earnings. The interest is completely tax-free in India, and both principal and interest are fully repatriable. Ideal for NRIs looking to keep funds in INR and earn high, safe returns.
- NRO FD (Non-Resident Ordinary): Used to deposit Indian earnings (rent, dividends, pension). The interest is taxed at 30%, and repatriation is restricted to $1 million per year with proper documentation.
- FCNR FD (Foreign Currency Non-Resident): Deposit funds in foreign currency (USD, GBP, EUR, etc.). This eliminates currency risk. Interest rates are lower (~2–4%), but the entire amount is freely repatriable and tax-free in India.
Ideal for: Risk-averse investors who want predictable returns.
2. Government Bonds and PSU Bonds
Government-issued securities are backed by sovereign guarantee.
- Treasury Bills & Government Bonds: Safe, stable, and issued for 91 days to 40 years. Return rates vary based on tenure.
- RBI Floating Rate Bonds: Interest adjusts every 6 months — good during rising interest periods.
- PSU Bonds: Issued by public sector undertakings, these bonds offer competitive interest and moderate risk. Long-term capital gains are taxed at 20% after 3 years with indexation.
Great for capital preservation with slightly better returns than FDs.
3. Certificates of Deposit (CDs)
CDs are time-bound deposits issued by banks, with a fixed interest rate and tradable in secondary markets.
- You’ll need a Demat account to hold and trade CDs.
- Not all CDs are freely repatriable, so consult your bank.
Good short-term instruments for NRIs with a Demat account.
Medium-Risk Options (Balanced Growth)
4. Mutual Funds
Mutual funds allow professional management of your money across asset classes.
- Equity Mutual Funds: Invest primarily in stocks. Suitable for long-term wealth creation. Taxed at 15% if sold within 1 year, tax-free after 1 year for gains up to ₹1 lakh.
- Debt Mutual Funds: Invest in bonds and money market instruments. Safer than equities but offer moderate returns.
NRIs from the U.S. and Canada may face some restrictions due to FATCA, so choose funds accordingly. KYC and FATCA compliance are mandatory.
Great for those looking for diversified, SIP-based investment strategies.
5. National Pension Scheme (NPS)
NPS is a long-term retirement product regulated by the PFRDA. It is also one of the many investment options for NRIs.
- Tier 1 Account: Mandatory lock-in till retirement. Offers tax benefits under Sec 80C and Sec 80CCD(1B).
- Tier 2 Account: Optional and works like a mutual fund with flexible withdrawals.
On retirement, 60% of the corpus is tax-free, and the rest is used to buy an annuity.
Ideal for retirement-focused investors looking for disciplined savings.
High-Risk Options (Higher Returns, More Volatility)
6. Direct Equity (Stocks)
Investing directly in the Indian stock market gives the highest potential returns but also carries the most risk.
- Requires a Portfolio Investment Scheme (PIS) Account, Demat, and Trading account.
- Gains taxed at 15% (short-term) or tax-free up to ₹1 lakh after 1 year.
You’ll need to do your own research or consult a stock advisor to manage volatility.
Best suited for financially savvy NRIs.
7. Real Estate
NRIs can invest in residential or commercial property, but not agricultural land.
- Long-term capital appreciation in urban centers like Mumbai, Bengaluru, Hyderabad.
- Potential rental income — taxable in India.
- Purchase must be made through NRE/NRO/FCNR account, and repatriation has certain limits.
A good long-term asset, though not very liquid.
8. Non-Convertible Debentures (NCDs) & Perpetual Bonds
- NCDs: Issued by companies for a fixed tenure and interest. Comes with credit risk.
- Perpetual Bonds: No maturity date. Issuers may repay at their discretion. Higher yields but higher risk.
Attractive interest, but be cautious about credit ratings and default risk.
NRI Investment Options: Tax & Repatriation Comparison Table
| Investment Option | Repatriation | Tax Implications | Additional Notes |
|---|---|---|---|
| NRE Fixed Deposits | Fully repatriable (Principal + Interest) | Interest income is tax-free in India | Only available for NRE account holders. Minimum 1-year tenure. |
| NRO Fixed Deposits | Repatriable after tax & within RBI limits (up to $1 million per FY) | Interest is taxable at 30% (plus cess & surcharge); TDS applies | Tax deducted at source; repatriation requires form 15CA/CB. |
| FCNR Deposits | Fully repatriable | Interest income is tax-free in India | Deposits in foreign currency; protected from INR fluctuations. |
| Direct Equity (Stocks) | Repatriable if bought via NRE account under PIS | STCG (held < 12 months): 20% LTCG (held ≥ 12 months): 10% (on gains over ₹1 lakh) | Investment only via PIS route; Demat account mandatory. |
| Equity Mutual Funds (MFs) | Repatriable via NRE account or partially via NRO | Same as above: STCG at 15%, LTCG at 10% (above ₹1 lakh); Indexation benefit not available for equity MFs | US/Canada NRIs face limited fund options due to FATCA compliance. |
| Debt Mutual Funds (MFs) | Repatriable via NRE/NRO depending on source | As per slab rate (treated as STCG); Indexation benefits removed from April 2023 | TDS applies; lower liquidity than equity MFs. |
| Real Estate (India) | Principal & sale proceeds repatriable (subject to taxes & documentation) | Rental income: Taxable at slab rate Capital gains: STCG or LTCG (20% with indexation for LTCG) | Sale of property by NRI involves TDS (20%-30%); lower for LTCG with indexation. |
| National Pension System (NPS) | Repatriable (Corpus + annuity payouts) | 60% corpus withdrawal: Tax-free 40% annuity: Taxable (as per slab) | Available only to Indian citizens (NRIs included); must open with NRE/NRO account. |
| Sovereign Gold Bonds (SGBs) | Fully repatriable (maturity amount & interest) | Interest (2.5% p.a.): Taxable Capital gains (on maturity): Tax-free | Held for 8 years (early exit possible after 5 years in secondary market). |
| Indian Government Bonds | Fully repatriable if purchased via NRE/NRO account | Interest is taxable Capital gains taxed based on tenure (with indexation for LTCG if held >3 years) | RBI’s Fully Accessible Route (FAR) allows NRIs to invest in specified government securities. |
Also read: Changes in Income Tax Bill 2025 and What Remains the Same for NRIs?
Repatriation Rules: Getting Your Money Back
- NRE Account: Fully and freely repatriable (both interest + principal).
- NRO Account: Repatriation capped at $1 million per financial year, requires Form 15CA & CB.
- FCNR Deposits: Freely repatriable, no Indian tax.
- CDs & NCDs: Check issuer rules; not always repatriable.
Plan your withdrawals ahead and maintain proper documentation.
Key Regulators to Know
- FEMA (Foreign Exchange Management Act): Controls cross-border transactions.
- RBI (Reserve Bank of India): Regulates NRI bank accounts, PIS, and repatriation norms.
- SEBI (Securities and Exchange Board of India): Regulates mutual funds and stock market.
- KYC & FATCA: Mandatory for all financial investments.
Start Investing, Start Growing
India remains one of the most promising economies for NRIs seeking growth and emotional connection with their homeland. With the right mix of fixed-income and market-linked options, you can build wealth that works for both your present and your future.
India Investment Made Easy for NRIs/OCIs with SBNRI
SBNRI is an authorized Mutual Fund Distributor platform & registered with the Association of Mutual Funds in India (AMFI). ARN No. 246671.
To explore top investment options for NRIs you can download the SBNRI App and choose from 2,000+ mutual fund schemes or can connect with the SBNRI wealth team to better understand Mutual Fund investments.
Visit our blog and YouTube channel for more details.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions. SBNRI does not intend to predict future returns, please read all related documents before investing.
FAQs
Q: What are the safest investment options for NRIs in India?
Fixed Deposits (NRE/FCNR), Government Bonds, and NPS are considered the safest due to low volatility and regulatory backing.
Q: Can NRIs invest in mutual funds in India?
Yes, NRIs can invest in Indian mutual funds using their NRE, NRO, or FCNR accounts. However, U.S.-based NRIs must check restrictions with specific fund houses due to FATCA regulations.
Q: Are NRIs allowed to invest directly in Indian stocks?
Yes, under the Portfolio Investment Scheme (PIS) by RBI, NRIs can invest in listed Indian equities through a registered broker with a Demat and trading account.
Q: Which investment gives the highest returns for NRIs?
Historically, equities (direct or via mutual funds) and real estate have offered higher long-term returns, though they carry greater risk compared to fixed-income options.
Q: How are NRI investments taxed in India?
Tax depends on the type of investment. For instance, NRO FD interest is taxed at 30%, short-term equity gains at 15%, and long-term debt fund gains at 20%. TDS is usually applied.
Q: Can NRIs repatriate their investment returns to their foreign bank accounts?
Yes. Investments made through NRE/FCNR accounts are freely repatriable. NRO accounts have a cap of $1 million per financial year, subject to documentation.
