India occupies the fourth position for foreign direct investments (FDIs), with only the US, China and Great Britain preceding it. The government of India, of late, has started offering various facilities to non resident Indians, more commonly known as NRIs, for attracting foreign investments to the country. NRIs are being allowed to invest directly in both the primary and the secondary capital markets of the country via portfolio investment schemes. Under the said scheme, non resident Indians could acquire debentures and shares of various Indian companies that are listed on the stock exchanges of India.
The growth of a country consists of various amendments to policies and acts that have to be carried out from time to time. The government of India has taken up investment favourable taxation policies as well as other documentation processes to start a company. Human resources are also being offered to the non resident Indians. All these factors are attracting NRI investments to India. cost competitiveness that was ushered by the economic reforms in 1991 and the market for goods and services driven by a swelling middle class has given the Indian market a high potential.
The Reserve Bank of India (RBI) allows a non resident Indian to open accounts in Indian banks as a business investor in India. NRIs are offered various deposit and savings schemes depending upon the type of the account. Joint holdings of an account are also being offered to the non resident Indians. This has helped those NRIs whose parents or other relatives stay in India.
The RBI has also given permission to non resident Indians to invest in shares of Indian companies. The NRIs also have the option for investing on fixed deposits, mutual funds and other financial instruments. The limit of the investments and the type of the company, however, are subject to the guidelines and amendments released by the RBI from time to time.
NRIs can also invest their money in government securities. They can convert their money to property. This takes the form of a long term investment, the value of which grows over time.
Benefits for NRIs
Non resident Indians can reap various benefits by investing in India. While loans are extended to the NRIs in lieu of deposit schemes for constructing homes in India, they are also being given tax relief when they send remittances back to India. With the progress in technology, the mode of financial transactions has changed with the advent of internet banking and online tracking of payments have made it easier for NRIs to invest in India. The country also has taxation arrangements with various other countries that help the NRIs to avoid double taxation. They are being encouraged more to invest in India.