A majority of non-resident Indians (NRIs) believe that their home country offers better investment returns than other countries. In technical terms, NRIs are either Indian citizens or persons of Indian origin (PIOs), but are not resident taxpayers under the Income-tax Act, 1961.
The survey conducted by SBNRI, an NRI-focused FinTech platform, encompassed NRIs from the United States, Singapore, the United Kingdom, Australia, and other countries.
Findings revealed that 53 per cent of Singapore-based NRIs were of the opinion that India offered better returns on investment than other countries they had invested in.
A total of 35 per cent of each Singapore and UK-based NRIs preferred to invest their hard-earned money in India, while 65 per cent of US-based NRIs preferred both investing and sending money home to India.
“India’s economic performance and global position signifies great investment opportunities for NRIs. Its rapid growth across multiple sectors has created a centre of stability with reduced market volatility. This holds immense opportunity for NRIs in terms of investment returns,” SBNRI said in its survey findings.
Opportunities, Challenges & Solutions
NRIs can invest in mutual funds, stocks, initial public offerings (IPOs), bonds, and real estate in India, but face regulatory challenges, which creates hurdles for them to invest in opportunities that offer high returns.
NRIs can invest directly in the equity market via the Reserve Bank of India’s (RBI’s) Portfolio Investment Scheme, which requires them to hold a non-resident external or non-resident ordinary account.
Other options include investing in IPOs using the same NRE or NRO account, and mutual funds.
There are no invest limit in mutual funds for NRIs. They can also invest in stocks through alternative investment funds, where the minimum ticket size for category I angel funds is Rs. 25 lakh.
Nearly 46 per cent of Australia-based NRIs followed by NRIs in Singapore and the UK found it difficult to obtain necessary approvals or licenses, the findings revealed.
Additionally, over 35 per cent of UK-based and NRIs from other countries who participated in the survey said they faced extreme difficulty in repatriating funds, while 35 per cent of Singapore-based NRIs said they had problems with restrictions on foreign investment in certain sectors.
Investing in India also carries currency risks, which can impact returns.
To mitigate investment risks, around 30 per cent of NRIs based in the UK said they invested in Indian stocks or funds denominated in the investor’s home currency, the report said.
Further, 27 per cent of them also hedged through forward contracts or currency options, while others diversified across multiple currencies as an apt way to manage currency risks, the survey found.
