Should NRIs Invest In India?

 While recent quarterly GDP numbers may be lower that expected, fundamentals of Indian economy remain strong

With a weakening rupee and lower GDP projections for FY 2024-25, there are some apprehensions about investing in India. However, such negative developments are likely to be a temporary setback. India is building a world-class infrastructure and focusing on exports, tech and manufacturing. These are expected to deliver robust results in the coming years. Let us take a look at some key reasons as to why NRIs should invest in India.

Improvement in global rankings - In 2023, India was ranked at 40th spot in the world in the Global Competitive Index. India's position in the Global Innovation Index has also improved and is now at 40th rank. It is expected that India's influence in the Asia-Pacific region will increase even more in the next decade. The hub for global maritime trade is expected to shift to the Indian Ocean in the next 5 years. As of now, the global maritime hub is in the Pacific region. This shift will benefit both India and China, as they will emerge as major manufacturing centers of the world.

Political stability and good governance - A strong central government, aided by like-minded state governments, has ensured peace and prosperity for the country over the past 10 years. With political stability, the country has been able to focus on development activities. Significant improvements have been made in the quality of life of the masses. We are also witnessing some major milestones across domains such as startups, automobile industry, technology sector, transportation and aeronautics and space research.

Portfolio diversification - India presents a good opportunity for investors who want to diversify their portfolio. Placing all their money at a single location can be a risky move on part of NRIs. That is why having a diversified portfolio, with investments in multiple countries, seems a much better investment strategy. With its huge growth potential and stable socio-political environment, India comes across as a safe and profitable investment destination.

Retirement plans - There are many NRIs who want to come back to India after their retirement. Such NRIs can benefit immensely from the various types of retirement plans available in India. Some options that NRIs can consider include life insurance pension plans and term insurance plans. NRIs can also choose child-focused insurance plans that ensure a secure future for their children.

Tax benefits - NRIs investing in India can benefit from a wide variety of tax exemptions and incentives. By investing in tax-saving instruments, NRIs can reduce their overall tax liability in a significant manner. For example, premium paid towards a life insurance policy in India is allowed as a deduction, as per the old tax regime. Similarly, NRIs can access various other tax benefits depending on the type of investments made.

As is evident from above, NRIs have a lot to gain by investing in India. The economy may face temporary setbacks, but the long-term prospects look strong.