How to Invest in India - Tips for NRI Investors

India is the fourth largest economy in the world measured in terms of purchasing power parity (PPP). A series of bold economic reforms persistently undertaken by the Indian Government has stimulated foreign investment in India. Highly skilled managerial and technical manpower that is comparable to the best available in the world, endows India with a distinct cutting edge in global competition. International investors are beginning to see India as a potential market for excellent return on investment.

Indian stock markets continue to be vibrant despite the prevailing global economic recession. The National Stock Exchange of India is the third largest and Bombay Stock Exchange the fifth largest in the world in terms trade volumes. Indian stock markets are having a dream run because of the effects of FII investments, good performance by Indian corporate sector and realization of better valuations by Indian companies.

For a NRI or Non-Resident Indian to invest in Indian stock markets the first thing is to open bank account and create an account with a reliable stock broker and make sure that all trades would be executed transparently. An NRI will not be able to execute any trade without nominating a stock broker. There is no limit as to how many stockbrokers one can have, but a stock broker nominated in India is a must.

NRIs have to decide whether to trade on a repatriable or a non repatriable basis. Let’s see what repatriable and non-repatriable mean? If an investor is willing to invest some amount say 5000 USD into India and does not want to take back any money to USA, then that is non-repatriable. But if they want to take the principal plus the profits back to USA, then they would need an NRE account that will enable taking out the principal and the profits after paying the due taxes as applicable in India.

For investing in Mutual Funds, however, a NRI does not need permission from the Reserve Bank of India and investment can be done on repatriation or non repatriation basis. A NRI investing in a mutual fund cannot make the investment with a foreign currency but only with Indian Rupees. NRIs can invest in all Indian mutual funds except in funds promoted by Asset Management Companies based in US like Fidelity, Franklin Templeton and HSBC

Permanent Account Number (PAN) card and Know Your Customer (KYC) registration are the mandatory requirements. It is preferable to appoint a local representative in India to sign transactions to avoid the time-delay and other hassles of sending documents every time through courier.