The rapidly growing economy and the development of the stock market in India have attracted the attention of Non-Resident Indians (NRIs) who want to invest back in India.

With a continuously increasing GDP, a relatively younger population, and newer sectors such as IT and Pharmaceutical industries, India presents a great opportunity for equity investors.

For the NRIs, making investments in Indian equities not only offers good returns but also adds a geographical spread to their international investments as well.

Let’s know more about the future of equity investment in India and what advantages it offers NRIs, making it one of the highly preferred options by investors who want to leverage India’s growth story.

The Future Potential of Equity Investment in India

Here’s a brief overview of the future potential of equity investment in India:

• Economic Growth and Stability: India is expected to be the world’s third largest economy by 2027 backed by robust GDP growth rate along with conducive economic policies.
• Expanding Middle Class: The rising middle class with increasing disposable income is anticipated to drive consumer spending thereby demand for various products and services.
• Government Initiatives: Pro-growth policies such as corporate tax cuts, investment allowances and infrastructural spending is promoting an investor friendly environment.
• Sectoral Growth: Key sectors like technology, consumer goods and insurance etc. are growing well with top rated funds and thereby attracting a lot of investor interest.
• Increased Market Access: Better access to market and financial literacy is motivating more people to enter into equity investments thus expanding the base further.

Benefits of Equity Investment in India for NRIs

The following are the advantages of equity investment in India for Non-Resident Indians:

• Diversification: Investment in Indian equities helps NRI investors to fine-tune their investment portfolio over a wider geographical area ensuring lesser risk and higher returns.
• High Growth Potential: India’s fast-growing economy provides tremendous growth opportunities making it an attractive destination for equity investments.
• Income Opportunities: NRIs can earn dividend income and capital appreciation on their equity investment which provides a regular income stream.
• Tax Benefits: NRIs also have certain tax advantages that are favorable to most of them e.g. exemption from income for certain purposes, double tax avoidance agreement (DTAA).
• Regulatory Framework: Well regulated financial markets in India ensure transparency as well as investor’s protection, thus providing a safe investment environment.
• Cultural and Economic Ties: Many NRIs have strong cultural and economic ties with India, which makes it an obvious choice for them to invest in their homeland.

How NRIs Can Invest in Indian Equities?

NRIs have several options to invest in Indian equities:

• Demat Account: NRIs need to open a Demat account linked to either an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account. This account is essential for holding and trading securities electronically.
• Foreign Portfolio Investment (FPI): NRIs can invest through the FPI route, which allows them to buy and sell securities on Indian stock exchanges. This requires registration with the Securities and Exchange Board of India (SEBI).
• Mutual Funds: NRIs can invest in Indian mutual funds, which pool money from various investors to invest in a diversified portfolio of stocks and bonds. This option provides professional management and diversification.
• Direct Investment: NRIs can directly invest in Indian companies by purchasing shares on stock exchanges. This requires a trading account and adherence to specific regulations, such as the Portfolio Investment Scheme (PIS).

Equity investment in India offers NRIs a unique chance to tap into a rapidly growing economy with significant potential for high returns. While there are risks to consider, the benefits of diversification, tax advantages, and the ease of investing make it an attractive option. As India continues to evolve as a global economic powerhouse, NRIs have the opportunity to grow their wealth and secure their financial future through smart equity investments.

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.