The NRIs Guide to Investing in India: Know Before You Invest

The Indian economy is expected to grow at a robust pace of 7-8% for the next few years. This translates into greater investor interest and a big demand for real estate in India as well as other sector investments such as venture capital, private equity (PE), and others. 

If you are an NRI looking to invest in India, then this guide will help you in understanding the various investment options available in the country, how they differ from one another and what type of risk they carry. Read on to know more about NRI investing in India...

How to invest in India as an NRI?

Investors can invest in Indian real estate and stocks by way of direct investment. The process of investing in real estate is a bit complex and requires a lot of paperwork. 

Apart from real estate, an investor can also invest in stocks by making an investment through an intermediary entity. One can also invest in stocks and mutual funds through an intermediary who acts as a custodian and/or a facilitator for the investor for a fee. 

Strict KYC for investing in India

NRIs are expected to play a major role in the economic development of the country by investing in various sectors that can bring huge economic benefits to the country. 

Therefore, the governments of various countries have strict KYC laws in place to prevent black money from entering the economy. 

In India, the government has also come up with a stringent KYC (Know Your Customer) law that requires foreign investors to submit complete and accurate details of the investors along with documents. 

Registered Stock Broker

When you invest in stocks or other investments in India, you must be well-aware of the intermediaries. Knowing the intermediaries is crucial in this scenario, as brokers are the intermediaries. 

Brokers might charge a brokerage fee, including a service fee, commission, and so forth. The costs can vary from broker to broker, so comparing the costs of different platforms might be helpful. It's important to compare broker costs since the broker will ultimately manage your money. 

It is also crucial to look at customer opinions to get a better idea of how responsive the broker is in handling investor concerns and doubts.

Investment Options for NRI Investors

To begin the investment journey, NRIs can look for the following investment options:

1. Bonds
2. IPO
3. Mutual funds
4. Portfolio management services (PMS)
5. Secondary market transaction: Trades in SEBI registered stock exchanges in India
6. Derivative trading: Futures and Options
7. Alternative Investment Funds (AIF)

Read more: Best Investment Options for NRIs in India

Things NRIs Should Remember Before Investing

• NRIs are permitted to buy a maximum of 5% of a company's paid-up capital.
• NRIs are permitted to open a PIS bank account with one recognised bank only.
• NRIs should always conduct transactions based on delivery.
• It is advised that NRIs should not trade in Banned and Caution scrip.
• As per the guidelines, NRIs should avoid investing in prohibited sectors.

Track/Analyse your Investment

Check the company and its guiding principles before investing in stocks so you know exactly where your money is going. 

For instance, in addition to financial growth, you want to know if your money is invested in a business that supports moral business practices, just wages, sustainability, etc. 

This may enable you to make wiser investment choices. As a result, take the time to determine the ultimate destination of your money.

Wrapping Up

As long as your decision is in line with your requirements and goals, there is no best or worst investment. 

The legal ramifications, currency conversion, lack of understanding, and numerous scams make it challenging to select the ideal NRI investment in India. You also need a comprehensive NRI savings account that can help you organise your investing options.

Open the NRI trading account with TradingBells

Hopefully, this blog will help you to provide all the information an NRI needs to know before investing.