NRI Investment Opportunities for NRIs — Explained

The Indian economy is booming. India's GDP growth is 6.8–7.8%. Many NRIs are interested in investing in India since NRI remittances exceed Rs. 120 billion. NRIs must understand their investing options and limits.

Learn more on the background, resident status, exceptions and the investment avenues along with the restrictions.

Possible Investments for NRIs — What is it?

This document covers

Background
Who is Resident & Non-Resident?
Exception to Resident Status
NRI investment avenues in India & Restrictions

1. Background

The Indian economy is experiencing remarkable growth and advancement. The growth of India's GDP is currently situated between 6.8 and 7.8 percent. An increasing number of NRIs are expressing interest in investing in India, as NRI remittances have surpassed Rs. 120 billion. It is essential to comprehend the various investment avenues available to NRIs and the constraints associated with them.

2. Who is Resident & Non-Resident?

The definition of residential status varies between FEMA and the Income Tax Act. According to FEMA, there are two residential statuses: Resident and Non-Resident. According to FEMA, a resident in India is defined as an individual who has resided in India for more than 182 days during the preceding financial year.

3. Exception to Resident Status

The following persons are not treated as persons resident in India even though they have resided in India for more than 182 days

A person who has gone out of India or stays outside India for any of the 3 purposes given below
A person who has come to or stay in India otherwise than for any of the 3 purposes given below

For or on taking up Employment
For Carrying on a business or vacation
For any other purpose in such circumstances as would indicate stay for an uncertain period

4. NRI investment avenues in India & Restrictions

According to FEMA, Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) are permitted to engage in certain types of investments in India while being restricted from others.

NRI and OCI investors must adhere to FEMA, SEBI, and RBI regulations when investing in India. If an NRI or OCI wishes to redeem, the Income Tax Act becomes relevant. The following outlines the types of investments permissible and impermissible for NRIs and OCIs.

S.No	Type of Investment	Eligibility for NRI's
1	Agriculture land	NRI's are not allowed to purchase new agriculture land, plantation or farmhouses in India. However, they can inherit agriculture lands and continue to hold the lands acquired during resident period. Refer @ Exception Note on purchasing Agri Land through RBI
2	Public Provident Fund (PPF)	NRI's cannot open a new PPF account. However they can continue the PPF account which was opened during resident period until maturity
3	Sukanya Samriddhi Scheme	NRI's cannot open a new Sukanya Samriddhi Scheme account.
4	Mutual Funds	NRI's can invest in Mutual Funds. These can be invested through NRE or NRO accounts and FATCA declaration needs to be done while investing. Refer @ Exception Note on investments in MFs
5	Equity Shares /ETF's/Bonds/Debentures/PMS	NRI's can invest in Equity Shares in India. These can be invested through NRE or NRO accounts
6	Fixed Deposits /Recurring Deposits	NRI's can open fixed deposits in NRO or NRE Accounts. NRE accounts are tax free whereas NRO accounts are taxable in India
7	Gold	NRI's can invest in physical gold, Sovereign Gold Bonds and Gold ETF's.
8	Insurance Policies/ULIP	NRI's can buy Life Insurance, Term Insurance, ULIP, Health insurance or any other insurance. Premium payments should be done from NRO/NRE accounts
9	Residential or Commercial properties	NRI's can purchase residential or commercial house properties in India. There is no restriction on number of properties. Purchase needs to be done through NRO or NRE accounts
10	Transferable Development Rights (TDR's)	NRI's are not allowed to trade in TDR's
11	Chit Funds	NRI's are allowed to invest in chit funds only in specific states.
12	Investments in Startup	NRI's can invest in startup's and Venture capital funds. Investments needs to be done through NRO accounts
13	Intraday Trading	NRI's are not allowed to do Intraday Trading in India
14	Futures and Options	NRI's are allowed to do trading in F&O segment in India
15	Currency/Commodity derivatives trading	NRI's are not allowed to do trading in Currency /Commodity derivates.
16	Regular Savings Account	An NRI cannot maintain regular Savings account in India. He should close or convert the same to NRO or NRE Account
17	Start a Business	An NRI can start a business in India but there are certain restrictions in forming different types of entities.
18	Home Loan	An NRI can take home loans in India. NRI's need to work on with their NRO/NRE Banks
19	Paintings, Arts, Antique Jewellery etc	NRI's can invest in Paintings, Arts, Antique Jewellery etc in India. However an NRI needs to ensure he is complying with FEMA

Exception Note on purchasing Agri Land through RBI

Nevertheless, an NRI may invest in agricultural land in India with the RBI's prior approval. The RBI will assess the residential status, purpose of the land purchase, and other relevant factors before granting approval.

Exception Note on investments in MFs

In general, NRIs or OCIs from the majority of foreign countries are able to invest directly in mutual funds through NRO or NRE accounts. However, certain mutual funds do not permit nonresident Indians (NRIs) from the United States or Canada to invest as a result of the FATCA declaration. Before investing, NRIs and OCIs must consult with the mutual fund companies.