A Detailed Guide on NRI Investment in India

12 May,2022

What is NRI?

NRI or non-resident Indian is an Indian citizen who has spent less than 183 days of a financial year or tax year in India. For the uninitiated, the financial year starts from 1st April to 31st March in the succeeding year. A non-resident Indian is a citizen of India, but he or she does not pay any taxes in India. And thus, they struggle to make investments in India.

NRI money investment is allowed in real estate, mutual funds, and other industries. Nevertheless, suppose you want to know who is non-resident Indian in detail. In that case, you must understand that NRIs need to follow certain regulations under the FEMA or Foreign Exchange Management Act for all investments they make in the stock market.

Here, you will get a clear idea of the different options you have to make NRI investments in India. 

NRI Investment Policy in India

As a non-resident Indian looking to invest in India, it is quite likely for you to have several questions on your mind, like the NRI investment policy in India and the options available to you. You might also want to know the process of investing in India as an NRI.
To start with, the investment policy in India for the NRIs entails several products. These include:
- Secondary market transactions or trades in the SEBI registered stock markets in India.
- Mutual funds
- Derivative trading
- PMS or Portfolio Management Services
- Bonds
- AIF or Alternative Investment Funds
- Real Estate

However, an NRI needs to have a savings bank account before investing in India. There are two different varieties of bank accounts that the NRIs can operate in India based on their earnings:
- NRO Bank Account or Non-Resident Ordinary Bank Account for income from India
- NRE Bank Account or Non-Resident External Bank Account for income out of India

Both are savings bank accounts maintained in Indian currency. As an NRI, you can remit your foreign earnings from outside India to your NRE bank account, which is completely repatriable. Your income in India is parked in the NRO bank account that is partially repatriable.

Types of investments in India

The financial market in India has greatly evolved over the years. And with this evolution, the financially savvy investors in India now have an assortment of long-term and short-term investment options to consider. The different types of investments in India are as follows:

Stocks: Investments in stocks or the equity markets offer avenues for creating wealth for a very long time. Stock investment in India offers good returns based on risk appetite.

Certificate of Deposit: A certificate of deposit is a money market tool issued against the funds deposited by an investor. Certificates of Deposit are deposited in banks in de-materialised form for a specific period.

Bonds: Bonds are one of India's most popular types of debt investment. The investors offer money to the issuer organisation in exchange for a bond, and in return for the bond, the issuer must pay interest on the principal amount.

Real Estate: Real estate investments involve buying commercial or residential properties allowing your capital to generate regular rental earnings.

FDs or Fixed Deposits: Fixed Deposits are provided by non-banking financial organisations or NBFCs and banks. They come as excellent options for growing funds while maintaining the highest levels of safety.

Mutual Funds: Investing in mutual funds involves investing in market-associated instruments like bonds, stocks or a blend of both debt and equity instruments.

PPFs or Public Provident Fund: PPFs are considered the safest option among India's different varieties of investment options. PPFs come from the government, and investments can be made in PPFs by opening an account with any post office or bank.

NPS or National Pension System is yet another investment policy in India supported by the Indian government. It involves long-term savings, making it the perfect addition to an individual's retirement investment plan.

ULIP or Unit Linked Insurance Plans: ULIP or Unit Linked Insurance Plans are investments added with tax benefits.

SCSS or Senior Citizens' Savings Scheme: These are government-supported investment schemes where residents above 60 years of age can open an SCSS account and invest in this policy for five years.

Investment Opportunities in India

The majority of the investors want good returns on their invested money without any danger of losing their principal amount. That's one of the reasons why many investors are on the lookout for the best investment opportunities in India. Further, they look for the top investment ideas in India that can enable them to double their amount in just a few months or years without any risk.

Nevertheless, the low-risk and high-return combination does not exist. The reality is that returns and risks have a direct link, which means that the risks are more if the returns are higher and vice versa. One of the best investment strategies in India is choosing the right investment avenue and then matching your risk profile with the related risks of the products before investing.

Different investment schemes in India come with high risk but can produce greater inflation-adjusted returns compared to various long term asset classes. However, you can also find low-risk investment opportunities that bring lower returns. For the best and safe investment in India, it is important to make it a point to invest in both financial and non-financial assets.

Why should NRI invest in India?

Now that you have an idea of the different options for USA NRI investment in India, here are the reasons why NRI should invest in India:

To avail good returns: Regardless of what an NRI invests as per their pocket, it will result in the growth of India. The best thing for an NRI is that the more money they invest in the right direction at present will bring more money in hand when they need it.

For retirement planning: NRIs can secure their future by investing in India. NRI investments in India help NRIs in getting ready for old age. Investing in India is a secure and safe option for NRIs who want to stay close to their family members after retiring from work.

To create financial assets: Making the right investments in India can help the NRIs grow their financial wealth and eventually build up their financial assets. For example, NRIs can create financial assets by buying properties in India.

To get money in hand for the family: Extra NRI investments in India come to the rescue of the NRIs if they need to send money to their families back home. This offers extra money in the pockets of the NRIs, thus giving them the scope to help their families financially.

NRI Investment Options India

Speaking of the different NRI investment options in India, there are many. The best NRI investment options are as follows:


NRI fixed deposit accounts are India's most common form of NRI investment. With NRI fixed deposits, the NRIs can deposit money into their accounts, and the money is kept safe for a pre-determined period. NRI funding for projects in India is also available depending on the interests the NRIs are willing to pay for the available funding.

Mutual Funds

NRI investment in mutual funds is also a good medium for the NRIs to invest money in India. Mutual funds are massive pools of money made through the investors' money and are managed by certified and qualified professional finance managers. Speaking of NRI mutual fund taxation, NRIs do not have to pay any taxes on investments in equity funds, while they have to pay 20% tax when they sell debt funds after owning them for more than three years.

Bonds in India for NRI

NRI bonds come with certain risks, but they also serve as the top investment option in India. The tax-free bonds in India for NRI include perpetual bonds and PSU or Public Sector Undertakings Bonds. There are no taxes on perpetual bonds, but with PSU bonds, the NRIs need to pay 20% tax if they sell the bonds after owning them for more than three years.

Pension Scheme for NRI in India

The pension scheme for NRI in India is one of the most reliable and best long term investment options backed by the government. By way of this scheme, the NRIs can invest either in debts, equities, or both. National Pension Scheme in India is for people between the ages of 18 and 60. The NRO and NRE bank accounts are generally used when investing in National Pension Scheme.

LIC Schemes for NRI

LIC schemes for NRI are compulsory savings leading to wealth creation. As these schemes mature, the family members of the NRIs and even the NRI policyholders can use the funds for different purposes like marriage, education of a child, repair of existing homes or acquisition of new homes and construction.

SIP Investment for NRI

Can NRI invest in SIP? If this question is lurking in your mind, you must know that the NRIs do not require any special permission to invest in SIP. SIP investment for NRI allows the NRIs to invest small fixed amounts of money regularly in their chosen or desired mutual funds. A certain fixed amount is deducted per month from the bank account of the investor NRI and invested in his or her preferred mutual fund for activating a SIP.

NRI Investment in Indian Share Market

If you are thinking about how can NRI invest in the Indian stock market, then you must know that aggressive investors can find it quite beneficial to invest in the Indian stock market. So, how NRI can invest in the Indian share market? NRIs need to have an NRO or NRE bank account, trading account and Demat account to invest in the Indian stock market.

Benefits of being NRI

There are large scale benefits of being NRI, but the best of NRI benefits in India is that you get the best of two worlds.
- You get a special bank account from an Indian bank.
- The earnings you make outside India are tax-free, provided you have paid all the concerning taxes in your country.


There are some of the greatest investment options available for NRIs in India. NRIs might be living outside India, but they can easily be a part of the economy back home through different investment options.


Can NRI invest in PMVVY?
Yes, NRIs can invest in Pradhan Mantri Vaya Vanadana Yojana as there are no specific eligibility requirements for PMVVY except that the subscriber should be a senior citizen.

How to invest dollars in India?
The RBI has released proper guidelines under LRS or Liberalised revenue Scheme permitting Indian residents to invest dollars in India without special permission.

Can NRI invest in PPF?
No, NRIs cannot make investments in PPF, and PPF investments are only for Indian citizens.

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