Here are best options for NRIs to invest in India

In an interview to CNBC-TV18, Gaurav Mashruwala, Certified Financial Planner gave best investment options in India for NRIs.

Also Read: Know the difference between NRE and NRO account Below is the verbatim transcript of Mashruwala's interview with CNBC-TV18. Q: What are the best investment options for non-resident Indians (NRIs) looking to invest in India? A: A non-resident Indian need to clarify or need to have clarity in mind as to why he wants to invest in India. Does he have some commitments either home loan's equated monthly installments (EMI) or parental responsibility or is he simply looking at growing assets because lot many times there is a risk or there is emotional aspect called home bias, which means irrespective of any part of the world one want to keep on investing again and again in his country and invariably one end up skewing portfolio. Therefore, if the situation is first where one has some commitments then he may want to consider Non Resident External Account (NRE) fixed deposit or Foreign Currency Non Resident (FCNR), which is repatriable, there are tax benefits etc. If one is looking at growing asset, which means if one is looking at putting in equity market, I would encourage looking at equity mutual funds, but funds which are domiciled outside India. So, that one do not have to bring money into the country and adhere to law. There are lots of offshore funds, which are domicile in various parts of the world, these are legitimate and they bring money into India so NRIs would get returns of Indian market without adhering to Indian regulations. So, it depends on why one is bringing in, what is the purpose. One has an option of debt as an asset class, in equity gold and real estate but need to have that clarity. Offshore route is something which I keep on recommending so that repatriability, tax implications and other adherence is easy for NRIs.    Q: Government trying to clampdown on gold import and the NRI gold purchase limit has been reduced from 5 lakh to 1 lakh or so. How difficult will it be for NRIs to purchase gold, if you can throw some light on that? A: I feel some time as why would NRI want to pick it up here. If he is in Gulf, for example he may want to pick up gold in his country. If his family is here and he wants to pickup gold for daughter’s marriage or is it more from investment perspective. If it is from investment perspective, one may want to try and do it in a country that one is residing. So, liquidity is easy, one adhere to local tax implications. If it is purely for requirement in India then whatever maybe the laws whether there are restrictions, there are no restrictions, in fact in Union Budget baggage allowance for gold for people coming from Gulf region has been enhanced. So, it depends which part of world one is in and what is the actual purpose.  Caller Q: I am a student and need Rs 8 lakh after seven years so how much money should I invest per month and where should I allocate that money? A: Two options; seven-eight years is a long time to look at equity as an asset class. If you are fine with volatile returns and returns which are not linear then start a systematic investment plan (SIP) of about Rs 6,000-6,500 per month into either index fund, a BSE Sensex based index fund or a Nifty based index fund and keep doing the SIP. I am assuming a rate of return between 13-15 percent annualised but it will not be linear. In case you are not comfortable with volatile returns and you get jittery then I would recommend debt based instruments. If it is debt based instrument then returns are usually lesser and hence you will have to enhance the amount so if you are looking at return of 7.5 percent to 8 percent then you may want to consider doing a recurring deposit either in a post office, which is for five years and then enhance it by two years or pickup a bank but then the amount you will have to set aside will be somewhere between Rs 7,000-7,500. So, equity if you are comfortable then about Rs 6,000-6,500, a SIP into an index fund, debt. If you are not comfortable with equity then recurring deposit or a debt based mutual fund and you should be more or less near the figure you are seeking.