What are the Best Options Available for Non-residents to Invest in India?
While there are many options available for non-residents to invest in India, ‘Real Estate’ is perhaps the fastest growing best option for non-residents. The reasons for this being the fact that this sector is self-organising from being an unorganised sector, and India is also one of the emerging economies of the world. Also returns from real estate investments have done better compared to other investment options available.
Non-residents can acquire, rent out, transfer and even sell immovable property. To add to this they can also take the money they get by renting or selling their property: this provision being subject to foreign exchange regulations. It is important to keep in mind that non-residents cannot acquire property like agricultural land, farmhouses and plantation.
Non-residents may purchase such immovable property either with the help of ‘home loan’ available in banks, or with their ‘own money’; the term ‘own money’ here referring to money received in India by way of inward remittance from overseas, out of income earned overseas, personal savings outside India. These funds can be remitted through Non-Resident External (NRE) or Non-Resident Ordinary (NRO) or Foreign Currency (non-resident) (FCNR) bank accounts.
In addition, non-residents can remit sale proceeds outside India for two such properties. Any remittance thereafter requires approval of the Reserve Bank of India (RBI).
Apart from real estate, non-residents can also invest in India through Bank Deposits. Non-residents can invest in Banks’ deposits accounts out of funds remitted from abroad or foreign exchange brought in India on a repatriation basis (better known as Fixed Deposits). In general they can open any kind of NRI Account, and they can also open FCNR accounts with US Dollar, Great Britain Pound, Euro or Japan Yen. Such FCNR accounts will be operational for a period of one to three years. They can also open NRE fixed deposit account with Indian Rupee. The duration for NRE account is the same as FCNR accounts.
Note: These accounts can be opened by fresh remittances or transferring remittances from existent accounts, and while remittances can be received in any currency, it can only be received in the designated currency in FCNR Accounts. These accounts can be a joint account with two or more non-residents holding an account. Such accounts are tax exempted.
Bank Accounts can be opened on a repatriation (NRE Account) and non-repatriation (NRO Account) basis. Nomination facility is allowed in favour of residents and non-residents. Non-residents can also maintain foreign currency account in India on permanent settlement in India.
Non-residents can invest in secondary market through Portfolio Investment in equity shares and/or convertible debentures.
In addition to these, non-residents can invest in Indian Mutual Funds. They can invest through company deposits on non-repatriation basis for upto a maximum of three years. Investment is also allowed in PSU Bonds and/or proprietary or partnership concern in India. Non-residents may also invest in air taxi operation and Commercial Paper issued by Indian Companies.
