In the past decade, India has become one of the fastest-growing and most preferred investment destinations in the world. Scores of NRI investors have shown their interest in the fast-paced economy and finally recognised the growth potential which is creating a consistent inflow of investments in the country.
Though most Foreign Investors (FIs) and Foreign Institutional Investors (FIIs) invest in direct equity, many NRIs prefer to invest in low-risk conventional financial assets, finds a survey conducted by SBNRI, an NRI-focused wealth management FinTech platform.
As the investment opportunities in the Indian market are in abundance, around 25 per cent of NRIs prefer to choose low-risk investment options, reveals the survey.
With the Indian economy moving on its growth trajectory and new-age startups demonstrating resilient business models, NRIs prefer India as a destination to keep their savings overseas in order to earn higher returns.
The recently conducted survey by SBNRI also reveals how NRIs from different countries are finding India as their preferred choice for investments to create wealth. The interesting part is how the expectation varies from NRIs across the world.
Here are the key findings of the SBNRI survey:
Witnessing the Indian economic scenario, NRIs have diversified their investment with multiple asset classes. The survey highlights – around 25 per cent of NRIs prefer to invest in low-risk conventional financial assets like Mutual Funds while 20 per cent of them prefer to keep their money in Fixed Deposits. Traditionally, investing in mutual funds was fiendishly difficult due to the heavy paperwork involved. Many countries also made these investments subject to their terms and conditions. However, the emergence of fintech has transformed the market landscape, taking the process online.
Leveraging the fall in rupee value
As per the survey findings – over 15 per cent of NRIs are more interested in the Indian commercial real estate segment. This fulfils their emotional need to stay connected to their home country, simultaneously, leveraging the fall in rupee value which opens avenues to owning land in their country. The depreciating Indian Rupee value against US dollars also provides them high rental yields and the emergence of fractional ownership is opening doors to all types of NRI investors in the commercial real estate segment.
Furthermore, 13 per cent of NRIs consider asset financing as one of the most preferred investment options in India. The survey also highlights Pre-IPO and basket of stocks are the least considered investment options for NRIs, making up to 10 per cent and 6 per cent respectively.
NRIs who invest in India
The uprising NRI investment trend in India has picked up at an unprecedented pace after the pandemic. NRIs are eyeing investment opportunities in India from across the world including – the USA, Canada, UK, Singapore, UAE and other countries like Australia, China, Qatar, Malaysia, Germany, New Zealand and Kuwait.
Varied investment pattern
However, the NRI investment pattern in every geography is different from their counterparts. A very interesting fact that has come up from the platform, – is that about 25 per cent and 22 per cent of US and Canada based NRIs respectively are willing to invest in med-high risk investment asset classes like Micro VC funds in India. This is majorly because India is viewed as an emerging country. Owing to this, the NRIs prefer to keep their savings in US and Canada, and view India as a destination to earn higher returns, hence highest interest is investing in Indian start-ups. Whereas 22 per cent of UK and Singapore based NRIs are more interested in the Indian real estate market especially commercial followed by NRE deposits. UK NRIs are also looking at taking a pie of Indian start-ups since India is now becoming the 3rd largest start-up capital of the world.
Talking about nations like UAE, 24 per cent NRIs want to place a safe bet by investing in MFs due to limited wealth. Similar to UAE, about 27 per cent NRIs in nations like Australia, China, Qatar, Malaysia, Germany, New Zealand and Kuwait also prefer investing in MFs.
To summarise, the Indian economic condition is showing a favourable time for NRIs to explore lucrative investment options. To have a diverse and robust portfolio, they are making several choices including Mutual Funds, Fixed Deposits, Commercial Real Estate and others to gain safer and long-term returns. Furthermore, the accelerated adoption of fintech is bringing more ease in providing significant exposure to NRIs.