2 expert modes NRIs can use to invest in Indian markets, using home currency advantage

The Indian investment markets have utterly fascinated the global Indian-origin (PIO, OCI, NRI or Expats), whether for debt or equity. Collectively, a wide variety of product offerings, investment safety and aggressive returns have been the head-turner for the last few years. However, for years, individual investors have perceived investing in India overly difficult & complicated, possibly an influence of older generations who’ve dealt with troubles in the Indian financial system including: excessive processing times, cumbersome paperwork, need of physical travels, etc. and above all, own psychological mind blocks.

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The lack of awareness on how to benefit from a stronger home country currency (than INR), as well as repatriating maturity proceeds effortlessly also puts investors on a back foot today, even if these were for strongest IRR investments sitting with the largest financial institutions of the world.

With a changed world of tech-enabled banking, secured payments and flexible country regulations, investment purchases in India transpire miraculously smoothly, all online in just a few clicks. Adding support in existing coronavirus era, an investor’s online journey concludes in a zippy along with digital documentation including FATCA (Foreign Account Tax Compliance Act), KYC/ video-based verification, etc. On every investment, one makes best use of home country’s currency value (pegged higher to INR) by remitting payments to the receiving financial organization’s account, either via the mode of: (1) Home country bank account using SWIFT wire transfer or (s) Direct transfer through NRE (Non-Resident External) bank account (NEFT). Both ways, one gets distinct commercial advantages than even a resident Indian.

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Continuing to use own NRO (Non Resident Ordinary) or Indian resident bank account for investments, severely kills investment returns in currency conversions, uncalled taxation hits and ending up with money stuck in India.

The ways of financial working have tremendously improved over the years. As we talk, most global life insurer brands based out of India offer products like: ULIPS (Unit Linked Insurance Plans), Life covers (Term Life) and Guaranteed Return (Income & Lump Sum) through these modes of payments, nimbly.

As per the RBI (Reserve Bank of India) regulations, reference notification No. FEMA 14(R)/2016-RB, it is stated that premium amounts received from outside India through proper banking channels is a valid and treated as ‘freely convertible foreign exchange’. A subsequent plus by the Life Insurance Council of India in June 2019, on the top, gives GST (Good & Services Tax) waiver up to 18% each year to all remittances to India, made through the said modes.

As a matter of fact, the cost of investment acquisition by an Indian-origin investor becomes way lesser than even a resident Indian who ends up paying the government levied taxes in full in all purchases. With the revised guidelines, the investors could maximize diversification of their investment portfolio.

How do you proceed?

1. Get in touch with your advisor to discuss your financial needs & goals.
2. Choose product(s) that are in line with your goals (debt or equity).
3. Complete all documentation and processing digitally.
4. Pay through your NRE (NEFT) or local home country bank (SWIFT) directly to insurer(s).

If your investment carries a life insurance cover, it may require you to undergo a medical test,
mostly conducted in your current country of residence.

There is landmark change to uptick your positive investing experience, wherein now, one may invest in any debt or equity product, even without possessing an Indian PAN (Permanent Account Number). Instead, the OCI card could be furnished. There is a sizeable chunk of global Indian-origin population, completing missing on the India growth story just because of non-availability of a PAN. With months to come, expect more and more investors to pour money in India digitally, capitalizing on the newest changes and making themselves wealthier for a comfortable life abroad.