A case for NRI’s to invest in India:
If NRI’s were looking for 2 reasons to invest in Indian markets those would be:
- Growth story – US market (S&P 500) had an historical return of about 10%. Indian markets have returned over 15% for the last 35 years. With significant opportunity for deployment of capital and a large consumer population, India has a potential to be a great growth story.
- Opportunity for improved valuation – Market Capitalization of all the listed companies in India is $1.5 trillion. This is equal to the capitalization of the top 3 companies in the US Apple, Exxon, and Microsoft. As India gets better integrated with the global financial system the valuation of Indian companies can be expected to be revised upwards.
A more responsive government, professionally run Central bank (RBI), demographic dividend, no tax on long term capital gains (more than 1 year) for equities etc.. make the case for investing in India stronger.
Key risks for NRI’s investments in India are currency risk (Rupee depreciating significantly), Inflation, and an occurrence of a major geo-political event that adversely impacts the market or the policy. We believe that these risks are remote and are more than compensated by the potential return. We advise our clients to plan their investments in India as part of their overall investment strategy.
NRI’s can participate in Indian markets through portfolio investment scheme launched by RBI. They need to have a PINS account with a bank and tie up with a broker for trading facilities – links to articles from NSE and Economic times. These investments can be through NRE and NRO accounts depending on the source of funds. Also NRI’s can repatriate up to a $ 1 million a year from their NRO accounts.
IndusWealth can advise and assist you in participating and profiting from India’s growth story, please reach out to us to explore further.
Come invest in Indian markets…..