Investing in Real estate has been a common trend for Non-Resident Indians for a long time. It has been a major investing sector for NRIs. Their investments in real estate reached a massive amount of $13.1 Billion in the last year. However, many promising themes have emerged with India’s fast developing economy. These themes show excellent potential for the NRIs to invest.
Through reforms, the government of India is trying to improve the economic conditions.
With all the sectors being impacted equally, a few will be preferred.
NRIs can consider investing in companies operating in different sectors like Renewable Energy, E-Commerce, and infrastructure. They can also invest in Indian securities like equities.
Let us understand why:
1. Renewable Energy:
India, in December 2020, recorded the lowest solar tariff of about Rs 1.99 per kilowatt-hour. This implied that Solar Power is cheaper than coal-based thermal power plants. NTPC sells the electricity produced from its Coal based power plants at Rs3.2 per Kilowatt-hour. As of Jun 1, 2022, India’s solar installed capacity was around 56.951 GW. This pushed India next to China and USA in the Renewable Energy space; this push also opened the avenue for investments in the same space.
Infrastructure has been a key driver of India’s growth. During India’s growth period, it spent about 7-10% of its GDP on infrastructural developments. During the Mid-90s, India barely spent 3% of its GDP on infrastructure.
Since there has been a rise. According to recent economic surveys, India requires about $4.5trillion by 2040 to develop the infrastructure and improve economic growth and community wellbeing. Roads, airports, metro, railway, power, ports, etc., are essential parts of India’s infrastructure.
As per the recent budget, the CAPEX for spending on infrastructure in the year 2022-2023 has been increased by 35.4%, from 5.54 lakh crore to 7.50 lakh crore. Most of the infrastructure projects will be undertaken through the PPP (Public Private Partnership) model, which will offer the investors many opportunities to invest.
E-commerce has revolutionized the way business is done in India. The Indian eCommerce industry is expected to grow to USD 188 Billion by 2025 from USD 46.2 billion by 2020. With a turnover of about $50 billion in 2020, India ranked eighth largest eCommerce market, trailing France and staying ahead of Canada. In 2022 the expected growth of the Indian E-commerce market is around 21.5%, touching USD 74.8 Billion. It is also expected to reach USD 200 billion by 2026. The growth has been due to India’s increased smartphone and internet penetration.
The internet connections spurted to 830 million by 2021 due to the Digital India programme/initiative. India has the third largest Online Shopper base of about 140 million as of 2020, and by the end of 2022, India will have 214 million hyperlocal E-commerce shoppers.
4. Indian Stock Market/Equity Investments:
In India, stock market investments are believed to be less than 2% of the population. Comparatively, 18% of US citizens and about 10% of Chinese citizens invest in the Indian Stock markets. Thus one can imagine the growth potential Indian capital markets have to offer. Long-term equities in India have reported an average of 14-15% growth. If one is confident about their equity selection skills, then an NRI can easily create a capital appreciating, dividend offering Robust Portfolio.
Many analysts strongly believe that the market rally started about eight years ago is saturating and reaching a plateau. The smart move for an NRI in 2022 would be to book partial profits in equity funds and stocks and reinvest the proceeds in short-term debt funds. If you’re investing in Funds, you should park your proceeds in a short-term debt fund and start an STP (Systematic Transfer Plan) into Flexi Cap Equity Funds.
In simple terms, we should book profits and wait for opportunities to re-emerge. The Tech and auto sectors are expected to outperform in coming years, So the frontline tech companies and major auto manufacturers could be a worthy bet in the current scenario. We could go for a tech or an auto mutual fund which diversifies our portfolio across a basket of stocks.
5. Fixed income Investments :
Inflation in India has reached an uncomfortable level, above the threshold set by RBI, but rate hikes are happening. This will force the banks to hike their deposit rates, but debt funds, especially the ones with long-term bonds, will be impacted negatively. However, Short term bonds will not be affected as much. Therefore the investors can avoid long-term and medium-term debt funds and should focus on investing in Short term funds in 2022.
Carefully plan your investment schemes and exploring new potent investments will be the true way of investing. Reaching out to Rurash would be the first step toward exploring potential investment opportunities other than real estate. Once a good opportunity is found, investing becomes a breeze with Rush.
RURASH is one of India’s leading investment management firms, providing financial solutions to augment the client’s wealth and facilitating in building of a purposeful legacy.