Rupee Depreciation : Is it the right time for NRI’s to invest in India?

With the Rupee depreciating in the last few months to as high as 21% against the Yen, the most asked question is, “Is it the right time to invest in India”.

Volatile global markets, risk aversion, Euro zone sovereignty issues, Greek debt, rupee depreciation;

these are terms that the investors all over the globe have become accustomed to these days.

With equities markets giving negative returns all over the globe and the rupee depreciating by over 12% to the USD, 6% against the Euro and over 21% against the Yen, the major question crossing minds of all NRI’s, PIO’s and OCI’s is “Is this the best time to invest in India?”

The Indian stock markets because of several reasons have underperformed the global markets as well as the emerging markets to a certain extend because of which investors are seeing negative returns, but if an investor has medium to long term view then this is the best time to invest in India. The Reserve bank of India has already given signs that interest rates in India have already peaked and if the inflation rate stabilize and start to reduce a bit the Reserve bank of India will start reducing rates which in turn will push the bond prices up. Looking at these scenarios NRI’s have lot of investment opportunities depending on their budget and the time frame they can remain invested for.

REAL ESTATE: Indian real estate prices have been on the rise and investors have even had 100% returns in certain metro cities in the last few years. Even the great 2008 recession was not able to stop this rally for a long time. With rupee depreciating NRI’s have more purchasing power in their hands.

Investors can earn three folds from investing in properties in India. After gold property is considered to be a hedge against inflation and property prices in India have more or less given 10% returns on an annual basis. These returns are much more than an average investor in the western world can hope of if they invest in their markets.

Investors can also earn from rentals from the property. With squeeze in supply over demand and the affordability factor rentals in the major metro cities is a decent income. You could easily get around 4% returns through renting your property and with luck favouring or with prime location the returns can increase to 5%.

With the rupee depreciating to the extend it is in the coming few months or years even if the reversal is half of what the rupee has depreciated you are still in line of getting at 6 – 7% returns because of the currency conversion. It would not be an over statement to say that investment in property can easily give you 30 – 40 returns in 2 – 3 years.

Equities: With sentiments running negative in favour of stock markets and risk aversion being the flavour of the scene an average investor is wary of investing in stocks markets. But despite all the negativity surrounding India at this moment the fact still remains that apart from China India is the only country in the world that is growing over 7% and has the potential of growing by 8 – 9 % annually. Even by the estimates of the World bank, India will grow at 7%.
This annual growth coupled with the rupee appreciation expected in few months coupled with the interest rates reduction Indian stock markets remains a destination where putting your money can give you extremely good returns in a medium to long term.

Bonds: With the reserve bank of India showing signs of start of the interest rates cycle the bond prices are expected to rise in the coning few months and it would be safe to assume that the would be offering good returns with no or very less risk. With the rupee depreciation offering currency conversion benefits these returns also can easily surpass the returns that investors can earn in the western world.

NRE Term deposits: With the Reserve bank of India deregulating the interest rates that the banks can offer on term deposits to NRI’s; NRI’s can gain from the high interest that India banks are offering and that too tax free.

The following investments you can refer to sites such as

www.icicibank.com
www.hdfcbank.com
http://www.NriInvestIndia.com/
http://www.NriCapital.com/
www.NHIA.org

Source:http://www.prlog.org/11884280-rupee-depreciation-is-it-the-right-time-for-nris-to-invest-in-india.html

How NRIs & PIOs can Invest in retirement saving plans in India?

Investing in a proper retirement plan is the primary concern of every employee worldwide and there is a wide array of options available. You can plan ahead and watch your money grow to make your retirement not only comfortable, but financially rewarding as well.

To arrive at a retirement plan, you need to check out various alternatives and also follow some simple steps. There are several user friendly services backed by 24/7 customer support for nonresident individuals to plan their retirement.

Clients are served by agencies that have tie-ups with a wide range of insurers to provide them the best in retirement plans. You can check out the individual options and decide on what would suit you best. Each plan has its share of advantages over the other as well as some shortcomings.

Professional agents are always there to help you on the internet for choosing the right plan. Retirement plans are also not a one-size-fits-all type and what would suit someone else will not suit you.

Decide how much income you would need

You need to decide on your own how much income you require to live comfortably after retirement after taking into account the possible hike in cost of living during the period.

The impact of inflation can be calculated by the inflation index calculator which will give you a rough idea to make your plan.

Take into account medical expenses as they tend to go up in old age, gifts, family expenses, and travel and rental charges if you do not plan to buy a home.

Market linked plans

Depending on your present income, you can plan how much savings you can do. Your retirement calculator will indicate the money you will need and the amount you can save. It is only by selecting the right retirement plan that you can meet all your post retirement goals comfortably. If you opt for plans that invest your money in the financial market, you can be assured of a healthy return. But you need to invest in a plan that would ultimately meet your criteria.

Plan from now to benefit from compound calculation

Instead of putting off retirement planning for another day, you should act quickly and the best time is right now. The more delayed the entry the lower would be your chances of getting a reasonable return on your investment. Costs are going up and to meet the price index post retirement would require you end up with a good return. As time is on your side, you can take advantage of the benefits of compounding calculation as well.

Your primary requirement would be to invest a specific amount each month and watch it grow. It would again depend on your monthly income and budget as well as how much money you can comfortably spare for investment.

The insurance sector in India has lots of tailor made plans to suit the NRI and even those who plan to come back to India after years of working abroad. Many NRI’s are investing in the burgeoning insurance business these days for planning their retirement.

The Indian insurance industry dates back to the early 19th century and life insurance premiums account for nearly 2.5 percent of the GDP. After economic liberalization kicked off and in the subsequent years beginning with 1999, the insurance industry has witnessed many path breaking changes with several global players entering the lucrative Indian market.

But even though the foreign direct investment has been hiked up to 26 percent, the largest insurer is still owned by the government.

There any many firms these days offering such professional services to non resident Indians. One such financial firm offering complete NRI investment services that I like is: www.NriInvestIndia.com

Why invest in India?

As a step forward to liberalize better, the process of reforms have really created good results by widening the opportunities of greater investment in the Indian economy. The paper work retrenchment is something which is highly noticeable these days and the government is much more generous with all its policies. A huge inflow of funds has been experienced significantly by the capital markets actually.

The Indian economy has fortunately acquired such a powerful position where it is ready to face the tough competition of facing the overseas market and deal with the international investors. The international investors seriously feel that India has a very good potential market which can promise them fantastic returns over their investments.

Now let us take a look at the policy changes that has taken place

Industrial policy

There has been some real good business promoting reforms that India has ensured to accelerate the economic growth of the country. The government has actually removed the requisition of the industrial license and had it simplified greatly which is now helpful for the investment actually. They have really taken a step forward to open their arms and welcome foreign technologies. Except for certain sectors this is applicable in all other industries.

Some of the sectors that would still require the industrial license are public sector enterprises, manufacturing of products which have been reserved for small scale sector, and industries that have been retained under compulsory licensing.

Foreign investment policy

Except for certain sectors like the rail and defense the foreign investment policy is found to be applicable in most of the sectors. It is really fortunate for international investors to get the permission of setting up 100 percent subsidiaries in India. They are not expected to take any kind of prior permission from RBI.

The investments should be following a set of guidelines and it should be fulfilled within a specified frame of time. But this policy is applicable only and only for investments that are new and not for the equity that are obtained from al ready existing owners of equity. “Automatic approval of route” is the name given to this particular procedure.

Foreign investment promotion board (FIPB)

 In order to encourage the flow of FDI (foreign direct investments) the government has set up something known as FIPB. This has led to the simplification of the process that is usually followed for investment actually. And this has also opened the scope of recommendation for the foreign investments.

Secretariat for industrial assistance (SIA)

The SIA is expected to report to the Department Of Industrial Policy and Promotion in the Ministry Of Commerce & Industry. They report with the purpose of establishing a one single window clearance for any new business initiative, receiving and then processing applications, facilitation of investors, making decisions pertaining to policy with respect to technology and investment and glean or collect and publish the data for some industries.

Automatic approval route and FIPB Route

The Foreign Direct Investment policy of the government of India and the Foreign Exchange Management Act of India 1999 (FEMA) guides any kind of foreign investment into India. After the period when reforms were introduced the Government has made it a point to do away with all the prerequisites for approval from the government for any kind of fresh investments actually. However the policies have not come to a complete end in certain sectors.

A new cell which is known as the “Investment Promotion and Infrastructure Development Cell” has been set up in order to encourage investment and to organize and harmonize with the industry for the purpose of having the infrastructure sector developed properly.

>> Please be advised that in order to invest in India you would need a PAN Number. More info on pan number can be found here: www.PanCardNri.com