The recent uncertainty around US tariffs and the chaos that has followed has thrown a wrench in people’s long term financial plans. NRIs now have to reevaluate their savings strategies in the light of this continually shifting economic landscape. Here are some ways the tariff upheaval that’s presently unfolding can affect NRI investments:
As tensions continue to simmer, the Indian Rupee could face the brunt and weaken compared to the dollar. A depreciating rupee can erode the value of NRI remittances and returns on Indian investments when converted back to USD or other foreign currencies. However, a weaker rupee would make Indian real estate more affordable for NRIs earning in dollars, potentially boosting property investments in their home country.
- Stricter Visa Restrictions
The immigration policy under the new American administration would also play a crucial role in how NRIs plan for the near future. With stricter rules, especially around the H1B visa, many might reconsider their long-term plan of settling in the US. They may accelerate their investments in India as a safeguard against an unpredictable future in the US.
If trade tensions escalate further, the Indian government may respond with policy shifts, introducing import substitutions, incentivizing domestic production or altering tax structures. While these steps might stabilize the local economy, they could complicate the investment landscape for NRIs seeking clarity and consistency.
Both the US and Indian stock markets have reacted sharply to recent geopolitical cues. Sectors like tech, pharma and IT outsourcing, where the two nations are heavily intertwined, may experience instability.
“With the announcement of tariffs, global investor sentiment is likely to take a hit leading to heightened volatility, even as some countries may seek to negotiate a deal. Uncertainty is likely to remain the operative word for global markets in the coming days as well,’ an expert quoted in a newspaper said.
NRIs with equity exposure in these sectors should be prepared for short-term shocks and possibly rebalance portfolios depending on the severity of trade disruptions.
However, tensions could also give rise to unforeseen opportunities. If global companies divest from China due to the additional retaliatory tariffs, India could stand to gain significantly. Sectors like manufacturing and digital infrastructure could grow, offering new investment avenues for NRIs. All in all, those with diversified portfolios, a long-term perspective and informed financial planning can navigate these tumultuous times. Staying updated on policy changes and seeking advice from international tax and investment advisors will be key as everyone plans for a turbulent future.
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Disclaimer: The article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of The South Indian Bank Ltd. or its employees. The South Indian Bank Ltd and/or the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial/non-financial decisions based on the contents and information’s in the blog article. Please consult your financial advisor or the respective field expert before making any decisions.