Investments options in India for Indian expats in UAE

Every year, a large number of Indians leave their homeland; either be it for work opportunities or for higher studies or set up a business. The main intention behind this is to earn more and perhaps get settled abroad.

UAE is an economically rich country when compared to India. To make the most of the opportunity, the expatriates living in UAE earn and tend to invest in some or the other sector. Investments are always important for everyone. This helps at the time of need. There are several investment options in India for Indian expats in Dubai can invest into, which would gain them profit as equally as their earnings in Dubai.

Best investment options in India for Indian expats

Best investment choices in India for Indian NRIs are ;

Best Investment options in India for Indian Expats Indian NRIs in UAE Gulf Dubai Saudi Arabia Qatar

Fixed deposits

This is one of the most common investment options NRIs prefer. For this, the Indian expats have to open an NRE account i.e. Non-Resident External account.

This account is for NRIs who have their investments in fixed deposits or term deposits. The principal amount will be attached to this account and the NRIs would be provided with 7% to 9% as interest rate per annum. The best part of NRE account is it is not taxable. NRIs need not pay any tax for the interest and the principal amount associated with this account.

If your investment horizon is medium to long-term and objective is to accumulate wealth, do note that investing in FDs may not be a prudent decision. (Related Article : Why not to invest in FDs/RDs for long-term?)

Real estate

Anyone who is planning for investment in the homeland, the first thing that comes to the mind is real estate. Real estate is a booming sector in a growing economy like India. NRIs tend to have at least one house/ property back in their home country.

There are no restrictions for NRIs to invest in immovable properties. They can own any number properties they wish to, be it a residential space, commercial space, agricultural land etc. But if you are going to get some monthly rent for these properties then you must have an NRO account i.e. Non-Resident Ordinary account. This account is to manage the rents, pensions you receive in India. This account is taxable. The account holder would be paying tax for the money deposited into this account. And for NRIs, it is mandatory to maintain this account if you are gaining money in real estate sector.

If the NRI has purchased a house or intending to purchase a house he can consider the possibilities of claiming exemption under section 54 series.

Stock markets

NRIs are eligible to put their money in the stock market. There are few shares published by RBI (Reserve Bank of India) which NRIs can purchase. This kind of investment comes under Portfolio Investment Scheme(PIS) which was initiated by the RBI. Even though this is a direct investment, NRIs have to execute through stockbrokers only who are registered with Securities and Exchange Board of India (SEBI).

Prior to the investment, they must get proper permissions for the operations on their shares. They should hold three kinds of accounts i.e a bank account which can be NRE account or NRO account, a demat account (for the shares) and a trading account which will be held with a firm registered with the SEBI.

Mutual funds

An NRI must hold either NRE account or NRO account or FCNR account. FCNR is Foreign Currency Non-Resident account is the account where you can maintain the money in foreign currency itself in order to avoid exchange fluctuations. Even FCNR account is non-taxable.

But for mutual funds, the investment should be done in Indian currency so having an FCNR account may not help much. The successful investors suggest that the key for a good profit in mutual funds is a three-step process that is Fill – Shut – Follow. Fill your account. Shut your account for 10+ years at least and keep an eye on it to know the growth.

(Related Article : ‘MF Investments & FATCA compliance‘)

Business partnership

Most of the NRIs’ favorite and the most followed option is investing in a business along with a fellow Indian or an NRI partner. There are no rules and restriction by the Government of India. But NRIs have to pay corporate tax to the government which would be 30%-40%. Most of them invest in restaurants, a chain of hotels or a franchise etc. For an NRI to start a business back in India, they should have a partner who is an Indian resident, be it a private limited firm or public limited one.

National Pension Scheme (NPS)

This is one of the good investments that NRIs can make if they hold their Indian Citizenship. NPS has two types of accounts. If a person of age 18-60 years invests in NPS and don’t want to break the bond till retirement, he/she can opt Tier 1 scheme. In Tier 1 and Tier 2 type schemes, the bond can be closed anytime after the total contributions are made and the account holder would be paid 20% of the savings made so far and the rest would be provided as an annuity, wherein some amount of the savings will be paid to the holder annually.

In Tier 2 yearly contribution of minimum Rs. 2000/- is mandatory. In Tier 1 yearly contribution of Rs. 6000/- is mandatory and by the end of the bond period 40% annuity will be provided and 60% of total account balance would be given as a lump sum. But one thing NRIs have to make sure is that they don’t withdraw their Indian citizenship. In case a person gives up their citizenship of India, their eligibility for pension scheme will end right away, and they’d be required to withdraw their savings from the scheme right away. To invest in NPS, NRIs have to maintain an NRO/NRE/FCNR account.

Though NPS is a decent long-term retirement oriented investment option, there are certain drawbacks that you need to be aware of. (Kindly read – ‘NPS Scheme & its drawbacks‘)

Conclusion

Apart from these investment avenues, there are other investment options Indian expats can explore back in their homeland. This would earn them an immense profit as an investment in a genuine firm is always a great option. And not in all the ventures NRIs need to pay the taxes. Being an Indian and would like to take advantage of the growing economy back in your country you can invest in genuine and trustworthy organizations which would not only help you but also India in its development.

This is a guest post by Nikitha of mymoneysouq.com.

About the Author

Nikitha is a thesis writer and marketer at MyMoneySouq.com, which is a platform to search, compare and choose the right financial product(s). It is the leading website in UAE for comparison of personal loans, credit cards, home loans, term insurance etc., in the UAE region.

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Kindly note that ReLakhs.com is not associated with MyMoneySouq.com. This is a guest post and NOT a sponsored one. We have not received any monetary benefit for publishing this article.The content of this post is intended for general information / educational purposes only.

(Image courtesy of fantasista at FreeDigitalPhotos.net) (Post published on : 16-October-2017)

  • Large number of Indians, leave the country and take transfer to another for various opportunities which they can’t get here. For this, investments is needed. This article helps all those people living outside the country and living in UAE who are willing to invest in order to generate wealth.

  • Laxminarayan says:

    Dear Sreekanth,
    I am currently residing in India and have chosen the in mutual funds route for investments.(SIP of Rs 20k/month)
    I have a opportunity to move abroad(EU) for about 5 years approx.
    Questions:
    1) Can I continue the SIPs as its currently being done, should I inform or change the accounts?
    2) Since I plan to invest some more now, is it recommended to invest another SIP(Rs 10k) or should I park the funds elsewhere for a 5 years investment period.
    3) Now that the status would be changed to NRI, where can I move my PPF funds? its approx 5Lks.

    Regards,
    LN

    • Dear Laxminarayan,
      1 – Yes, you can continue with your investments. You need to inform your financial institutions about the change of Residential status (if any).
      2 & 3 – It depends on your investment objectives / fin goals and your existing portfolio.

      • Laxminarayan says:

        Thank you Sreekanth, Also one small question. Should I change all my existing SB accounts to NRE account or only then ones which I transact with?

        • Dear Laxminarayan ..An NRI is not permitted to hold any regular/resident Savings account. So, you need to get them converted to NRO / NRE.

          • Laxminarayan says:

            Thank you.
            One last question: Could you recommended from your research which NRI Banking provide good service and also levy transparent transaction fees.
            I looked the top hit as SBI, HDFC ICICI NRI Banking, Could you suggest anything else?

          • Dear Laxminarayan,
            Personally, I always prefer to bank with Pvt ones 🙂

  • Ahmad Hussein says:

    On an average, in last 10 years in cities like Mumbai, Delhi & Bangalore property price has risen @10% p.a. And if you are looking for significant returns on investment in short period of time, then real estate is definitely not the right option.

    • Dear Ahmad,
      Agree with you!
      In fact, the probability of getting ‘significant returns’ on any investments in short-term is very low.

      • Ahmad Hussein says:

        Very true Sreekanth!!

        With long-term Real Estate Investment, you will get many benefits like long-term Financial Security, Tax Benefits, Capital gains and locations etc.

  • Harinath says:

    Dear Srikanth,

    At present I am NRI. I am getting a lump sum amount from village agiculture land sale proceed. How can I invest this. At present Indian markets are in high. I
    Have investments in shares and mf in India and also through my nre account in direct funds. I don’t this amount for more than 5 to 7 years. Could u suggest me good strategy of investment procedure.

    • Dear Harinath,
      If you have an investment horizon of around 5 years and investment objective is wealth accumulation, you may set up STPs (systematic transfer plan) from couple of Liquid funds to one largecap/diversified equity fund and one Balanced fund.
      For ex : HDFC Liquid fund to HDFC Balanced fund.
      Can you share your MF portfolio details (Scheme names).
      Suggested readings :
      List of best investment options!
      Best Equity funds
      Best Balanced funds
      How to pick right mutual fund schemes?

      • Harinath says:

        Thank you for ur kind guidance.
        My investments r in HDFC midcap, icici balanced, birla SL Frontline, mirae asset India opportunities.
        Also how long shall I continue stp from liquid funds. 3 to 6 months OK.
        I heard from birla SL CEO through news paper that if we invest 1 rupee in equity fund, 1 or 2 rupees to be invested in debt funds.
        How long it is a valid statement. Could u pl. Provide some analysis on this so that our readers will get more information. U can read this on 28th Oct 17 eenadu paper.
        Thanks,
        HARINATH

        • Dear Harinath,
          You may setup STPs for say 6 to 12 months, can consider your existing funds like ICICI balanced fund/ Birla frontline for this.
          The said statements are generic ones, dont take them seriously. Each individual has his/her own requirements, risk profile and time-frame, accordingly one should diversify his asset allocation.
          Balanced funds do serve the purpose of automatic portfolio rebalance, as they invest both in equities and debt securities.

  • Hussain says:

    How to start investing in NPS ? Can I apply it by online ? Please guide me.

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