For overseas Indians, the country offers a tremendous opportunity for investment and wealth building. As per the government of India, non-resident Indians (NRIs) are mainly given three kinds of facilities as far as investment is concerned. Among the options available are bank accounts in India, investment in securities and debts and investment in immovable properties such as real estate.

Types of accounts

NRE account: This is rupee denominated account. The interest earned is tax free. The amount in the account is repatriable.

NRO account: This is also a rupee denominated account. The interest earned is taxable. The repatriation limit is $1 million in a year.

NRNR account: This is a deposit account with six-month to three-year term which can be extended. Only interest can be repatriated. The interest is not taxable.

FCNR account: This is a term deposit account for maximum of three years in foreign currency denominated form.

Investment in securities

Indian market has been a darling for foreign investors. The market will keep its momentum as India is expected to grow at a respectable pace for a few decades. NRIs can invest in securities and debt instruments to exploit the opportunities presented by the stock market. NRIs can invest in stocks and debt funds directly or in mutual funds.

The Indian government has allowed NRIs to invest in the market directly or through portfolio investment scheme. It has allowed the following types of investment:

Investments in stocks through portfolio investment scheme: This allows NRIs to invest in security market without obtaining any permission from RBI or the government. In some cases, however, they need permission from FIPB (Foreign Investment Promotion Board) in case of investment in agriculture or plantation activities.

Investing in securities is done through portfolio investment scheme. As per this scheme, NRIs can select one branch designated by RBI for transactions. The transaction can then happen through the specified branch for stocks and convertible debentures. This can be repatriable or non-repatriable.

Investments with repatriation clause: Investments in mutual funds, bonds, term deposit with companies for at least three years, and government securities are allowed with repatriation benefits.

Investments without repatriation benefit: Investments in the form of capital contribution in any proprietary or partnership firm is allowed, but it is not repatriable. NRIs can also invest in new issues through this route.

Other investments: Other investment such as money market mutual funds, deposit, non-convertible debentures and commercial paper are allowed, but without any repatriation benefit.

Investment in assets

NRIs can invest in real estate. They do not need any permission to invest in real estate except in cases where they want to acquire agriculture land. The repatriation clause needs to be looked at in individual cases. The government allows up to 100% investment in real estate development as well as financing of housing and commercial development. There are facilities available for returning NRIs so that their investments in foreign countries are not disturbed. They can also open resident foreign currency account to freely move money between NRE/FCNR accounts.

Points to note

NRIs can invest in stocks by directly buying stocks of a specific company or through a mutual fund. It is important to ascertain the credentials of the advisor for any investment requirement. You should apply for a PAN card and then you can open demat and trading account linked to your NRE/NRO account which can be used for trading purposes. If you are concerned about repatriation clauses, open the appropriate account and invest in right instruments to avail repatriation benefits. In most of the cases, repatriation is allowed after a lock in period of three years.