The Indian diaspora across North America, UK. Europe, Africa, Middle East has always been an integral part of the development of India. Not too long ago, PM Narendra Modi hailed NRIs, saying that he considers NRIs as India’s brand ambassadors and symbols of India’s capacity and capabilities.
There are about 15 million NRIs and about 20 million Overseas Citizens of India (OCIs), thus making India the world’s largest Diaspora. India accounts for the world’s highest remittances, at about $85 Billion annually. The flow of remittances has also helped in financing the trade deficit.
A fact is often overlooked that NRIs, like other investors, require differential and tailored investment advice. Most of the remitted money is put to use to assist family needs at home in India, and any excess savings is simply invested in Real Estate.
In the major metropolitan cities, NRIs have accounted for about 15% and more of the annual real estate sales.
Most of their investment is now stuck in real estate projects, and they are wanting to diversify, but lack of clarity and lack of availability of professional advice has held them back. Fixed deposits are an easy option that offers higher interest rates as compared to the countries of their residence but, there is not much room for arbitrage due to the exchange rate volatility.
Factors Driving the investment growth in India
For the last 25 years, the following factors have supported the investment industry and are continuing to do so,
- Strong domestic economic growth
- A more diverse corporate universe
- Better institutional infrastructure
- Easy and better access to capital markets
The most attractive aspect of Investing in India is the opportunity Indian markets present compared to any other equity market in any other country. There are plenty of alpha opportunities in large-cap, mid-cap and small-cap segments of the Indian Equity markets.
Direct investment in Indian Equity markets is certainly a good option but requires active monitoring, which can be tedious to some NRIs. They solely rely on the professional advice of a professional manager and invest through Mutual funds or account mandates through PMS (Portfolio Management Services) or in an AIF (Alternative Investment Fund).
India also has a growing ecosystem of startups with more than 100 unicorns, the third highest in the world. The startup world, alternative finance and unlisted shares give NRIs exposure to some of the most exciting opportunities anyone can come across in the financial world.
Reasons why NRIs choose to invest in India.
The government, over time, has eased up on the compliance part, making it less burdensome, but NRIs still require an NRE account or an NRO account along with a Demat account.
By investing in India, NRIs can have the following benefits:
- Rapid Economic Growth
India has witnessed a drastic growth in its GDP over the years. India ranks fifth in the world when it comes to GDP. India is expected to be in the World’s top 2 economies in the next thirty years. The Indian economy is expected to grow at a pace of about 6.5% to 7%. A Stable economy inevitably reduces the risks of investment. India also has a stable central government and thus reducing further volatility.
- Diversification
NRIs can easily diversify their investments with several available assets. They can easily invest in mutual funds, alternative investment funds, bonds, CFDs and other investment vehicles.
- High-Interest rates.
The interest rate which we receive in India is higher than offered in the developing countries and quite higher than the ones offered by the developing countries.
| Country | Rate of interest |
| India | 4-7% |
| US | 0.25% |
| UK | 0.10% |
This huge difference in Interest rates can get you great returns if you invest in India as an NRI compared to if you invest in the country of your residence.
- Exponentially Growing Mutual Fund Industry
India’s Mutual Fund Industry has witnessed an exponential growth of about 4.5 times in just the last decade. From an industry of about Rs7.31 Trillion in 2011, it has grown to an industry of about Rs 33.06 Trillion in 2021. Investing in Mutual Funds in India can be quite beneficial if you’re looking for wealth accumulation.
Conclusion
Investing in India can be quite a safe option for NRI investors based in the UK, USA and East Africa. There can be a few challenging steps which the NRIs might face, like opening of an NRE or NRO account or simply a Demat Account; with Rurash’s Demat Services, it can be a cakewalk,
RURASH is amongst India’s tech-driven investment management company, providing financial solutions to augment the client’s wealth and facilitate building a legacy.
For any guidance regarding financial instruments, please reach out to us at invest@rurashfin.com or call us at +91 9820038401.