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Indian Government Schemes for NRI

To help Non-resident Indians invest in their motherland, the Government of India offers a diverse range of NRI investment plans. The top Indian Government schemes for NRIs include fixed deposits, mutual funds, government bonds, and the national pension scheme.

India is among the fastest-growing economies in the world. It is currently going through a massive industrial and infrastructural development, attracting investors from all around the globe. Despite the possibility of a large-scale recession, the Indian markets have performed exceedingly well in the last couple of years.
 

As a Non-resident Indian (NRI), you can take this opportunity to invest in your motherland and get optimum returns. The Government of India has also launched diverse NRI investment plans to encourage NRIs to invest in their native country. These plans offer a range of benefits, including high returns, tax* exemptions, and the flexibility of fund repatriation.
 

If you are unsure of where to start, keep reading to explore some top Indian Government schemes for NRIs, their features, and benefits.

Who are Considered as NRIs?

Before you delve into the details of the best NRI investment plans, you must understand who is considered as an NRI in India. The Foreign Exchange Management Act (FEMA) of 1999 and the Reserve Bank of India (RBI) outline specific guidelines to define NRIs for investment and taxation purposes. According to these Acts, an NRI is a person who:
 

  • Is an Indian citizen.
  • Holds an Indian Passport.
  • Had stayed in a foreign country for at least 183 days during the preceding financial year.
  • Has moved out of India for employment, business, education-related purposes.
  • Has gone out of the nation intending to live abroad for an indefinite period.
     

Anyone who can meet these conditions is eligible to invest in any of the government schemes for NRIs in India discussed below. Note that the spouse of an NRI cannot be considered as an NRI unless they fulfil the conditions mentioned above.

Government Schemes for NRIs in India

Fixed Deposits for NRIs

Fixed Deposits (FDs) are one of the safest and most common NRI investment plans in India. They allow you to invest a lump sum for a fixed tenure and earn interest at a predetermined interest rate.
 

Several banks, non-banking financial corporations (NBFCs), and post offices in India offer FD accounts for NRIs. However, the interest rate may vary from one financial institution to another.
 

Types of Fixed Deposits for NRIs

As an NRI, you can choose from three types of FDs:
 

  • Non-Resident External (NRE) FD Account
    An NRE FD account helps you convert your investments to Indian National Rupees (INR). You can use this account to invest your earnings from a foreign country. The interest earned would be tax-free and both the interest and the principal can be repatriated.
  • Non-resident Ordinary (NRO) FD Account
    An NRO FD account helps you invest your earnings made in India. You can invest in this account in INR. However, the interest earned will be taxable in India. Additionally, only the interest amount can be repatriated.
  • Foreign Currency Non-Resident (FCNR) FD Account
    An FCNR FD account allows you to make investments in a foreign currency. Both the principal and the interest are tax-free and fully repatriable.
     

Benefits of Investing in Fixed Deposits for NRIs

The benefits of investing in an FD for NRI include:
 

  • Earn guaranteed1 and tax-free returns
  • Comes with flexible tenures of 7 days to 10 years
  • Offers a better interest rate than a savings account
  • Premature or partial withdrawals are allowed
  • Returns are compounded quarterly, semi-annually, or annually
     

National Pension Scheme (NPS) for NRIs

The National Pension Scheme (NPS) is an Indian Government’s pension scheme for NRIs and resident Indians. You can open an NPS account with an authorised bank or a post office, and make regular investments in it. The minimum amount required to open an NPS account is ₹500. Post that, you need to invest at least ₹6,000 in it every year till your retirement.
 

The investments made in NPS accounts are invested in a combination of assets, including equities, corporate bonds, and government securities. You can choose to decide your asset allocation according to your life stages.
 

Once you attain the age of 60, you can withdraw up to 60% of your NPS corpus, and the remaining 40% will be used to provide you with annuity benefits.
 

Mutual Funds for NRIs

Of late, mutual funds have emerged as popular investment tools for all types of investors, including NRIs. They pool investments from individual investors, institutions, and high net-worth investors, and invest them in different money-market instruments2, including equities, bonds, and government securities.
 

Mutual funds are offered by Asset Management Companies (AMCs). There are a few government-owned AMCs in India, which allo NRIs to invest in mutual funds along with resident Indians.
 

Types of Mutual Funds for NRIs

You can choose from three different types of mutual funds:
 

  • Equity mutual funds
    These funds invest a majority of the corpus in equities or stocks.
  • Debt mutual funds
    These funds invest a majority of the corpus in debt-based instruments, including bonds, treasury bills, etc.
  • Hybrid mutual funds
    These funds invest in a combination of debt and equity-based instruments.
     

Benefits of Investing in Mutual Funds for NRIs

The benefits of investing in mutual funds include:
 

  • You can choose between equity, debt, and hybrid mutual funds as per your risk appetite and investment horizon.
  • You can invest as a lump sum or through a Systematic Investment Plan (SIP).
  • They provide potentially better returns than most fixed-income generating instruments.
     

Government Bonds and Securities

As an NRI, you can also invest in government bonds and securities, including treasury bills, PSU bonds, and RBI bonds (also known as the G-Sec bonds). They are issued by state and central governments in India to raise capital from public investors.
 

Government bonds come with fixed tenures, ranging between 5 to 40 years, and provide interest to investors.
 

Types of Government Bonds for NRIs

Typically, there are three types of government bonds:
 

  • Fixed-rate government bonds
    These bonds offer fixed interest rates for the entire tenure.
  • Floating-rate government bonds
    These bonds offer fluctuating interest rates as per the prevailing market conditions.
  • Inflation-indexed bonds
    The interest rates are adjusted according to the inflation rate in India.

Conclusion

You can choose between any of the NRI investment plans in India and invest in them to fulfil your diverse financial goals. However, ensure that you meet the RBI and FEMA guidelines for NRI investors. Additionally, you should also be mindful of the laws of the country in which you are currently residing. 

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions

Can I invest in more than one investment option for NRIs?

Yes. You can invest in multiple investment avenues to diversify your investment portfolio. However, you need to fulfil the RBI and FEMA guidelines for NRI investors.

What are the documents required to invest in NRI investment plans?

You may need a PAN card, Aadhar card, and a bank account to invest in NRI investment plans. However, the documents required may differ from one investment option to another.

Can I repatriate my income from NRI investment plans?

Interest or income earned from NRI investment plans are repatriable subject to certain conditions. In certain cases, you may need to take permission from the RBI to repatriate your income.

If my spouse works in a government organisation but I do not, can I take a PLI for both of us?

You can take a joint policy for your spouse and yourself under the ‘YugalSuraksha’ scheme by paying a little extra premium.

Can I continue with my PLI policy even if I quit my government job?

Yes, you can continue with your PLI policy in such a case by making your policy premium payments at any post office across the country.

Disclaimers

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
  •  For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • Tax: * Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
  • Guaranteed/Guarantee: 1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry.
  • 2Market-linked returns are subject to market risks and terms & conditions of the product. The assumed rate of returns or illustrated amount may not be guaranteed and depends on market fluctuations.