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8 Investment Plans for NRIs in India

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Created on
July 29, 2022


What’s Inside

Did you know, as an NRI, you can invest in the Indian market?

Yes! You heard that right. According to the Ministry of External Affairs, 13.4 million NRIs reside outside India. Now, that's a big number.

With that, the Indian government has made it easy for NRIs to diversify their global portfolio.

However, the country you're currently residing in may have some laws and restrictions with NRIs investing their money. So, before you invest in your home country, be aware of all the laws and regulations.

Best Investment Options for NRIs

India has been attracting a lot of Foreign Direct Investments (FDI) with its rapid industrial development over the last few years. This makes Investments in India highly valuable for any NRI. With many investment options, you, as an NRI, may get confused. But don't worry! Let us help you find the best investment options in your homeland.

1. Fixed Deposits

Fixed Deposits, or FDs, are among the safer ways to invest in India for an NRI. This investment can help you earn a fixed-interest income. 

Here are three different types of NRI Fixed Deposit Accounts.

Non-Resident External (NRE) Fixed Deposit 

You can open an NRE FD account to deposit your earnings in foreign currency converted to Indian rupees. If you wish, the principal and the interest can be fully repatriated later to your country of residence.

Non-Resident Ordinary (NRO) Fixed Deposit 

You may open an NRO Fixed Deposit account to maintain and save your income generated in India in Indian Rupees. This income may be from dividends, rental income, pension and similar sources. However, an interest earned over ₹10 lakhs is taxable in India at ~33%, along with surcharge and cess.

Foreign Currency Non-Resident (Banks) Fixed Deposit 

FCNR Accounts are ideal for investing and maintaining funds in India. They are term deposit accounts, allowing premature withdrawal after 1 year. Opening an account involves transferring from an NRE Account. Interest earned is tax-free, and both principal and interest are fully repatriable. You can also avail overdraft facilities. 

So, you can choose FCNR Accounts for saving in foreign currencies.

2. National Pension Scheme

The NPS for NRIs is a long-term retirement savings scheme designed for Non-Resident Indians aged 18-60. NRIs can open an account with a minimum contribution of ₹500 and contribute a minimum of ₹6,000 annually while complying with KYC norms. The selected pension fund management invests the funds based on the criteria set by the PFRDA.

3. Equity

Non-resident Indians may directly invest in the Indian stock market under the Portfolio Investment Scheme (PIS).

NRIs need to have the following accounts for equity investments:

  • Non-Resident External (NRE) Account
  • Non-Resident Ordinary (NRO) Account
  • NRI Demat Account
  • NRI Trading Account with a registered broker

Please note that Income from dividends and capital gains earned by NRIs from stocks and equity-oriented mutual funds schemes are taxed in India. 

4. Mutual Funds

Can NRIs invest in mutual funds in India? 

Yes, as long as an NRI complies with the regulations outlined in the Foreign Exchange Management Act (FEMA), they can invest in mutual funds in India.

Here are some of the fund houses enabling Mutual Funds investments for NRIs based in the US and Canada:

  • Aditya Birla Sunlife Mutual Fund
  • L&T Mutual Fund
  • SBI Mutual Fund
  • UTI Mutual Fund
  • ICICI Prudential Mutual Fund
  • Sundaram Mutual Fund

5. Real Estate

Real estate is a stable investment with good long-term returns. NRIs can buy and rent out residential and commercial properties in India, but not agricultural land. NRIs can use the following bank accounts for property transactions in India: Non-Resident External, Non-Resident Ordinary, and Foreign Currency Non-Resident accounts.

6. Public Provident Fund

You can continue with your PPF account, which you opened as an Indian resident. However, if you don't have a PPF account, you can’t apply for it as an NRI. Also, note that you cannot extend your PPF account after the maturity period of 15 years.

7. Bonds and Non-Convertible Debentures

As an NRI, you can invest in bonds and NCDs in India, including government securities in the form of NRI bonds. The three main bond categories are:

  • Public Sector Unit or PSU Bonds: You lend money to a PSU company and receive interest when the bond matures. Interest rates are determined by the creditworthiness of the issuing PSU company. Interest earned on PSU bonds is tax-free U/S 10 (15) (IV) (h).
  • Non-Convertible Debentures (NCDs): A secure and long-term investment that is backed by the company's assets.
  • Perpetual Bonds: Do not have a fixed maturity date and provide a set amount of yearly returns.NRIs can also claim tax deductions by investing in capital gain bonds by REC and NHAI under section 54 EC. 

8. Pre-IPO Investment

You can buy and sell shares of a company that is yet to be listed on a public exchange in the pre-IPO market. Private companies sell their shares through an investment firm that facilitates the transaction. The units will be deposited in your NRI Demat account when you buy unlisted shares. 

Pre-IPO shares may have a massive upside if the company does well. However, these investments are riskier than listed shares because this market is less regulated than the regular equity market.


NRIs have various investment options in India, including fixed deposits, National Pension Scheme (NPS), equity, mutual funds, real estate, Public Provident Fund (PPF), bonds, non-convertible debentures, and pre-IPO investments. NRIs need to understand the applicable laws and restrictions before making investment decisions. With a range of choices available, NRIs can diversify their investment portfolio and make conscious financial decisions to secure their future.

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Frequently Asked Questions

1. Can NRIs invest in India with just a PAN Card?

NRIs can invest in a mutual fund and other asset classes with a PAN card and NRE/NRO account. However, the documents required differ as per the asset class.

2. In which funds can NRIs invest?

NRIs can invest in Mutual Funds, National Pension Scheme, Bonds and NCDs, Fixed Deposits, Public Provident Fund, Equity, Real estate, and more.

3. Is mutual fund tax free for NRIs?

No, NRIs are taxed on Mutual Funds similarly to resident Indians. For equity mutual funds, investments under 1 year or less will be taxed at 15% as per the short-term capital gains taxation rules. For long-term investments, this rate is at 10% as per the long-term capital gains taxation rules.


Investment and securities are subject to market risks. Please read all the related documents carefully before investing. The contents of this article are for informational purposes only, and not to be taken as a recommendation to buy or sell securities, mutual funds, or any other financial products.
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8 Investment Plans for NRIs in India


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