Non-Resident Indians (NRIs) are in a unique position where they can capitalise on India’s dynamic economic growth while diversifying their portfolios internationally. With favourable tax regimes, high-return investment avenues, and government incentives, India offers NRIs a wealth of investment opportunities.

This article serves as a guide for NRI investment options, strategies, and tax considerations to help NRIs optimise returns while aligning investments with their financial goals.

1.Equities and mutual funds

Indian equities and mutual funds are some of the best investment options for NRIs seeking long-term growth. The Portfolio Investment Scheme (PIS) allows NRIs to invest in Indian stocks, though they are restricted from engaging in intraday trading or short selling.

Mutual funds, however, offer greater flexibility, enabling NRIs to access professionally managed equity, debt, and hybrid funds. Investors can also invest in tax-efficient instruments such as the Equity-Linked Saving Scheme (ELSS) that provide Section 80C deductions, enhancing post-tax returns.

2. Real estate

India’s real estate market is booming, particularly in Tier One and Tier Two cities. Cities like Bangalore, Mumbai, Pune, and Hyderabad remain top investment destinations due to their strong economic growth and high rental yields. Factors like strong economic growth, high rental yields, and favourable policies make property investments attractive.

Luxury residential projects in tech hubs like Bangalore and Noida offer modern amenities and robust capital appreciation. Additionally, NRIs seeking diversification can explore commercial properties or Real Estate Investment Trusts (REITs).

3. Tax benefits and regulatory considerations 

Understanding tax implications is crucial when investing in India, as tax benefits can significantly impact overall returns. As an NRI, tax planning is very important, and Double Taxation Avoidance Agreements (DTAA) with countries like the U.A.E., U.S.A., and Canada can significantly reduce tax liabilities.

For instance, NRIs in the U.A.E. may enjoy tax-free income from Indian Non-Resident External (NRE) deposits. The Union Budget 2025 has further enhanced opportunities by raising NRI banking limits in Indian companies and introducing tax-free infrastructure bonds, ideal for long-term wealth preservation.

4. Fixed deposits and debt instruments

For risk-averse NRIs, NRE and Foreign Currency Non-Resident (FCNR) deposits provide stability and tax benefits. NRE deposits offer tax-free interest in India, while FCNR deposits hedge against currency risk. Indian banks provide competitive rates on these instruments. Additionally, government bonds and PSU bonds offer low-risk, steady returns.

5. Strategic portfolio diversification

NRIs should adopt a multi-asset approach to balance risk and reward. A conventional portfolio might allocate 40–60% to equities/mutual funds, 20–30% to fixed income, and 10–20% to real estate or alternatives. It must also be geographically diverse, spread between Indian and global markets such as the U.S.A. and Europe to mitigate currency risk. Currency-hedged funds and periodic rebalancing ensure alignment with market shifts.

Beyond traditional investments, NRIs can explore emerging opportunities that align with India’s long-term economic growth.

Key tips for NRI investors 

• Leverage NRI-specific accounts: Use NRE/Non-Resident Ordinary (NRO) accounts for seamless repatriation and tax benefits.
• Stay updated on regulations: Monitor FEMA guidelines and DTAA updates to ensure compliance.
• Seek professional guidance: Engage advisors specialising in cross-border investments and tax optimisation.

Conclusion

India’s booming economy, coupled with favourable tax regimes and high-growth sectors, positions it as an attractive destination for NRI investments. By strategically allocating assets across equities, real estate, and tax-efficient instruments, NRIs can maximise returns while mitigating risks. With informed decision-making and professional guidance, NRIs can build resilient portfolios that thrive in both Indian and global markets.