Why India ? Mother Land of unlimited opportunities

1. Why India?Mother Land of unlimited opportunities

2. Do you want to be one of them ?

3. Why Should you • Invest in India To Day?

4. REASON 01 • India to remain one of the fastest growing • economies in the world. • Source: International Monetary Fund • FDI inflows increased by 37% since the • launch of Make in India initiative. • Source:  • Department for Promotion of Industry and Internal Trade,Govt.of India • Leading investors ranked India as the most • attractive market. • Source: Ernst & Young Emerging Markets Center

6. REASON 02 • Largest youth population in the world India to have world’s largest youth population by 2020.Source: United Nations Population Fund • India to be the largest supplier of university graduates in the world by 2020.Source: British Council • India has the third largest group of scientists and technicians in the world.Source: All India Management Association & The Boston Consulting Group

8. REASON 03 • Huge domestic market Rising affluence is the biggest driver of increasing consumption in India.Source: Boston Consulting Group • India’s consumer story will be led by its 129 mn urban mass consumers. Source: Goldman Sachs Group • Private consumption to be four times by 2025.Source: McKinsey Global Institute

10. REASON 04 • Rising economic influence Centre of global maritime trade to move from the Pacific to the Indian Ocean Region. India and China will be the largest manufacturing hubs of the world by 2030.  Source: Lloyd’s Register Marine & University of Strathclyde, Glasgow • Connectivity to Central Asia and Europe via the International North-South Transport Corridor (INSTC). Source: Press Information Bureau, Government of India • In the next five years, India to have greater economic influence across the Asia-Pacific Region.Source: Baker McKenzie & Mergermarket Group

13. REASON 05 • Indian infrastructure story Over the next three decades, more than 350 mn Indians will move into cities. Source: McKinsey Global Institute • Over the next two decades, more than $ 1.5 tn investments have been planned for infrastructure.Source: Press Information Bureau, Government of India • Investments planned across the key government initiatives in various sectors: ~~ Highways (Bharatmala & NHDP)  - $ 106.5 bn ~~ Railways - $ 131.7 bn ~~ Ports - $ 61.5 bn (Port development) + $ 123 bn (Port-led Industrialisation) ~~ Airports - $ 58 bn ~~ Industrial Corridors - $ 100 bn (DMIC - phase I) ~~ Smart Cities - $ 14.6 bnSource: Government of India

14. REASON 06 • Rising global competitiveness : India jumps 65 positions from 142nd (2014) to 77th (2018) in 'World Bank's Ease of Doing Business Ranking 2018'. Source: World Bank • India ranks 40th on the Global Competitiveness Index 2017-18.Source: World Economic Forum • 95% of 1.2 bn Indians are covered under Aadhar Scheme, one of the world’s largest social security program. Source: Press Information Bureau, Government of India • PradhanMantri Jan DhanYojana, a formalization of savings scheme under which 312 mn bank accounts have been opened with savings amounting to $ 11.6 bn. Source: Ministry of Finance, Government of India • Goods and Services Tax (GST), the biggest tax reforms since independence, paves way for a common national market by integrating various indirect taxes. Source: Government of India

17. Best NRI Investment Options in India • Bank Fixed Deposits • Direct Equity • Mutual Funds • Real Estate • Government Securities • Bonds & Non-Convertible Debentures (NCDs) • Certificate of Deposits (CDs) • National Pension Scheme (NPS)

18. Who is Non Resident Indian (NRI) • Foreign Exchange Management Act (FEMA) says that anybody who has stayed in India for less than 183 days during the preceding financial year is considered to be a Non Resident. • As per Income Tax Act 1961, a person is an NRI if he hasn't stayed more than 182 days in India in the current financial year OR if he hasn't stayed in India for 60 days or more in the previous financial year and for 365 days or more in the preceding 4 financial years. • Ideally, you should be compliant with both of these rules to be on safe side. If you only fulfill one criterion, please consult your CA. • Do note that if you have already taken a citizenship of a foreign country, you will be classified as a Person of Indian (PIO) origin. But, for all tax and FEMA purposes, NRIs and PIOs are treated exactly the same. For NRI bank accounts, you have three options - NRO, NRE and FCNR

19. 1. NRO (Non Resident Ordinary Accounts) • An NRO (Non-Resident Ordinary) savings account is probably the first NRI bank account you will open. Most banks will simply allow to redesignate your current savings account to an NRO account.These accounts are useful for managing all your Indian incomes i.e. rent, dividends, pension or gifts.You can open this account either just before you become an NRI or after you have already become one. • Please note that these accounts have repatriation limits. In one year, you can only repatriate a total of USD 1m from NRO accounts. • Additionally, this repatriation will need a tax paid certificate from a certified CA. If you deposit your foreign funds in this account, they will be subject to repatriation limits too.The interest that you earn on this account is freely repatriable but will be taxed in India. These accounts could be a savings account, a current account or a fixed deposit account.

20. 2. NRE (Non Resident External Accounts) • NRE accounts allow you to hold and maintain your foreign currency earnings in Indian rupees. You can open one up once you have already started residing outside India. • The funds to this account should be mandatorily credited from your foreign earnings. These deposits will be converted to INR at the prevailing conversion rates. • These accounts are completely repatriable i.e. you can take your funds out of India at any time without any restrictions. • Also, the interest you earn on NRE accounts is tax-free in India. These accounts again can be a savings account, current account or a fixed deposit account.

21. 3. FCNR Accounts • FCNR is not a savings or a current account, rather, it's a term deposit with a pre-defined maturity period. It stands for Foreign Currency Non Resident account. You can open this account once you have already become an NRI. • FCNR accounts are maintained in foreign currency unlike NRE or NRO accounts. You can choose from any major currency like USD, Pound, Canadian Dollar, Deutsche Mark, Yen or Euro. • The interest earned on FCNR accounts is tax free in India and the funds are fully repatriable. FIRC (Remittance Certificate) • If you have made the payment via a cheque or a draft, you must attach a Foreign Inward Remittance Certificate (FIRC) with it. In case, that is not possible, a letter from the bank would also do. This confirms the source of funds. Redemption • The AMC will credit the corpus (investment + gains) you get after fund redemption to your account after deducting taxes. They can also write a cheque for the same. Some banks allow to credit the redemption amount directly to the NRO/NRE account. If you have opted for non-repatriable investment, they can credit the proceeds only to an NRO account.

22. Different Investment Options

23. Bank Fixed Deposits • Just like resident Indians, Fixed deposits (FDs) are amongst the most popular investment choices for NRIs too. In FDs, your money is deposited for a pre-agreed term at a guaranteed interest rate. • Fixed deposits for NRIs can be NRE, NRO or FCNR. • theinterest on an NRE FD is tax free while interest on an NRO FD account will be taxable. • Do note that the earnings in an NRO account are subject to TDS and balance will be credited only after deducting all taxes. However, you can claim easily a refund by filing a tax return in case your payable tax is less than tax deducted at source. • Deposits in an NRE account can be repatriated without any limit, whereas those from an NRO account are restricted to a total of 1 million USD per annum. • NRE FDs can earn an interest ranging between 6% to 7% (Indian currency) while NRO FDs will earn anything between 4% and 7%. Exact rate you will get will depend upon your deposit period as well as the bank you make the deposit with. • FCNR accounts are maintained in foreign currency and the interest rate for these accounts depends upon the currency of your deposit. But as an indication, for a deposit made in USD you will earn between 2-3%, while for one in Japanese Yuan, you may earn as low as 0.01% per annum. • FCNR deposits are fully repatriable and completely tax free.

24. Equity and Debt Mutual Funds • Mutual funds are an exciting investment option for NRIs regardless of their investment plans. Whether you are thinking about short term, medium term or long term, there is a mutual fund out there that matches your goals perfectly. • To invest in mutual funds in India, NRIs will need to have either an NRE or an NRO account. All the investments will be made and denominated in Indian currency. • Your choice of NRE or NRO account will determine the repatriability of your returns. Use NRE account if you want repatriability, as investments from NRO account will come with repatriation restrictions. • Unless you are US or Canada NRI, you can invest in any mutual fund in India without any restrictions.

25. 8 Fund Houses accepting MF investments from US and Canada • SBI Mutual Fund • Birla Sun Life Mutual Fund • ICICI Prudential Mutual Fund • UTI Mutual Fund • L&T Mutual Fund • PPFAS Mutual Fund • Sundaram Mutual Fund • DHFL Pramerica Mutual Fund

26. MF SCHEME INVESTING OPTIONS • NRIs can invest in all categories of mutual funds - Equity, Balanced, Debt or Liquid. But which one you should invest in depends upon your risk profile and investment horizon. • Equity funds are suitable for long term investments while you should stick to debt funds for short term investments. • From returns perspective, historically, top performing equity funds have delivered between 15-20% annual returns while debt funds have stayed in the range of 8-10% per annum on an average. Relative to most western geographies, equity funds in India have historically provided good returns. • Your investments are liquid if you are investing in open ended options. For close-ended mutual funds, your lock-in will be determined by the pre-agreed maturity period.

27. The Tax liability for NRIs on mutual funds • The tax liability for NRIs on mutual funds is exactly same as that of a Resident. The only difference will be that TDS will be deducted for all investments that are done by NRI accounts. • For equity mutual funds (or balanced funds with >65% equity), if you redeem your investments after 1 year or more, the profits are treated as long-term capital gains and are tax-free. However, if you sell your holdings with in one year, you will incur a short term capital gains tax of 15%. Essentially, a 15% TDS will be deducted before balance is transferred to your account. • For debt funds or any other fund with <65% equity, if you sell after 3 years, your profits will be considered as long term gains and will be taxed at 20% after indexation. Any sale of a debt fund before 3 years will attract taxes as your existing tax slab. For NRIs, the TDS in this case is at 30%. Any dividends you earn are tax free in your hands. • If your overall tax liability comes to less than TDS deducted, you can file a tax return and claim the refund.

28. How can NRIs benefit from MF investments? As one of the fastest growing economies in the world, Indian economy attracts thousands of investors from abroad. Given below are some of the benefits NRIs can enjoy by investing in Indian mutual funds. a. Easy to manage funds online from anywhere With the option of investing online, it is easier to track and manage your mutual fund from the residence country too. Investors can buy, redeem, switch as well as opt for systematic transfer or withdrawals online. No need to give cheques, make DDs, fill in physical forms or even be in the same country! You will receive regular account statements (CAS) via email. Asset Management Companies also post portfolio disclosures online to keep investors informed. b. Scope for more profits from rupee appreciation If the INR value has hiked on the resident country’s currency, it means more profits for the investor. For instance, if an NRI from the UK invests 1000 pounds in a mutual fund in India at an exchange rate of Rs. 100 to 1 pound. Even with possible depreciation, the investor can reap good returns. NRIs and PIOs can also get the same benefits by investing in India-based mutual funds in their own country of residence.

29. Direct Equity • NRIs are eligible to invest directly in Indian equities under the ​Portfolio Investment Scheme (PIS) of RBI. Only one PIS account is allowed per individual and each transaction done through these accounts will be reported to RBI. • You will need three things to make direct equity investments in India • A separate NRE/NRO savings account linked to PIS • A demat (dematerialized) account to hold your shares in and • A trading account with a registered broker with SEBI • RBI publishes the list of stocks that are eligible for NRI investments.,thereis a restriction on how much stock you can own for one single company and you can't own more than 10% of the paid-up capital.NRIsare not allowed to do any intra-day trading or short-selling. They can only trade on a delivery basis. • Taxation on equities for NRIs is exactly same as residents, except that that these taxes are deducted at source(TDS) by the brokerage. • If shares are sold after holding them for 1 year or more, the profits are considered to be long term capital gains and are tax-free. Any sales prior to 1 year will attract a short term capital gains tax with a TDS of 15%. • IPOs are not covered under PIS. But NRIs can easily apply for them through their trading accounts or 3-in-1 accounts.

30. Real Estate • Real estate in the past has given reasonable appreciation and can be assumed to be a lucrative long term investment. • NRIs can purchase both residential and commercial properties. However, you cannot buy agricultural lands, farm houses or plantations. However, this rule doesn't apply if you get ownership of agricultural land through inheritance or as a gift. • The payment for buying a property has to be made in Indian currency and has to mandatorily come from an NRO, NRE or FCNR account. • Please note that the account type you choose to make the payment for purchase will determine how much flexibility you have when you want to sell your property. • If the initial payment for buying the property was made through an FCNR account, money equal to originally paid amount can be repatriated. The rest of the proceeds, however, can't be repatriated. • If the payment was made through an NRE account, again, only the proceeds to the tune of original cost can be repatriated and balance has to stay in the NRE account. • If the payment was made through an NRO account, you can repatriate the full amount subject to the overall limit of $1m per year. To be on safe side, get a professional to help you if you are planning to invest in real estate.

31. Real Estate Real estate no longer the default choice • Housing or real estate was a popular mode of investment for NRIs until 5 to 7 years ago. High capital appreciation seen in the 1990s and the first decade of this century along with monthly rental income led to NRIs gravitating towards housing. But the scenario is quite different to day. The real estate market has given poor returns over the past decade. Housing prices have either fallen or remained flat in the top cities over the past 5 to 7 years while rentals have stagnated. Often finding a tenant for properties proves difficult. A large number of properties owned by NRIs stay vacant for extended periods of time. Moreover, prices may not rise anytime in the near future, given the excess supply in most Indian cities. Real estate is also an illiquid investment. • NRIs who need to sell a property urgently should be prepared to sell at a discount of 20% to 40% on the market price. • Real estate is currently plagued with unaffordable prices, low rental yields, rising home loan rates, builder defaults, government crackdown on black money, and massive unsold inventory. Thus, it is no longer a wise investment choice for NRIs. There are, however, pockets that have a demand-supply mismatch. The commercial segment is doing better than residential. If there are specific markets that NRIs understand well, they can consider those options selectively.

32. Government Securities • A government security is atradable instrument issued by the Government of India to raise funds for development or for special projects. • These funds can be short term (usually called treasury bills or T-bills with maturities of less than a year) or long term (usually called government bonds or dated securities with maturities of one year or more). • These investments are considered to be extremely safe as they have a sovereign guarantee backing them. • Treasury bills or T-bills are suitable for all short term investments. They are typically issued with a validity of 3 months, 6 months or 12 months. • T-bills don't pay any interest as such, but are issued with a discount to the face value so at redemption you will make a profit. • T-bills can be purchased by participating in RBI auctions and they can be purchased in multiples of 25,000 INR. • Formedium to long term investments, you should look at dated government securities. The interest on these securities can either be fixed or floating.

33. Government Securities Some common types of dated government securities are as follows: • Fixed rate government bonds,Floating rate government bonds,Capital Index bonds National Saving certificates • NRIs are not allowed to invest in National Saving Certificates but they can invest in T-bills or other dated government securities quite easily. • To do so, you will first need to transfer the desired investment amount to your NRE, NRO or FCNR account. Once this amount is deposited, the Indian bank can purchase (or sell) these securities on your behalf. The interest from these securities will also come directly to your NRI account. The interest earned from these instruments is taxable if it's credited to NRO account and tax-free if the account used is NRE.However, if the bond has been marked as tax-free during the issue, the interest becomes tax-free in India regardless of the account. • Thesesecurities are tradable on money market and hence are highly liquid.

34. Bonds and Non-Convertible Debentures (NCDs) Both public and private companies issues securities to raise money as well to raise capital. • PSU bonds are generally considered to be less risky while private bonds will have a wide spectrum of risk associated with them • Non-convertible debenturesare secured debt and are issued by corporations with the backing of its assets. • Perpetual bondsworks like lifetime irredeemable fixed deposits. Investors will receive a fixed interest on these bonds every year, but don't have an option to redeem their principal. Perpetual bonds are issued by banks under tier-1 capital.

35. Certificate of Deposits • Certificates of deposits (CDs) are non-negotiable money market instruments issued in demat form or as promissory notes. • They are like fixed deposits, but have a higher liquidity as they can be freely transferred from one person to another. • CDs are issued in India by scheduled commercial banksor financial institutions. These certificates are issued at a discount to face value and will typically yield a higher effective rate of return as compared to most bank deposits. • Their maturity period ranges from 7 days to 1 year for banks and between 1 and 3 years for financial institutions. And the minimum amount you can invest is 100,000 INR. • This option is best suited for short term investments. NRIs can invest in these certificates on a non-repatriable basis.

36. National Pension Scheme (NPS) • NPS is government backed voluntary defined contribution retirement savings scheme. • Any NRI who is still an Indian Citizen and is aged between the age of 18 to 60 years can avail of this scheme by opening an NPS account. If you are not an Indian citizen anymore, you won't be allowed to open a new NPS account. • NPS at its heart is a pension scheme and has restrictions on how much you can withdraw. • Tier 1 account • All contributionsin this account will be locked till retirementwith some exceptions. • If you retire prior to attaining 60 years, you can make a lump-sum withdrawal of 20% of your corpus while 80% of the corpus has to be mandatorily used to buy an annuity. • If you retire when you are 60 years or more, you can withdraw up to 60% of the accumulated corpus as a lump sum while the remaining 40% has to be mandatorily used to buy an annuity.

37. National Pension Scheme (NPS) Tier 2 account  This account comes without any restrictionsand you can make withdrawals from this account whenever you want without any penalties. You can only have a tier-2 account once you already have a tier-1 account. Both tier 1 and tier 2 accounts offer a variety of funds to choose from. You can choose between Equity, Corporate Bonds or Goverenment Securities. You can manually decide the ratio of your allocation between these three options or it can be decided automatically basis your age. To invest in NPS as an NRI, you will need to open an account through any of numerous authorized entities called points of presence (POP) or avail of eNPS facility. Almost all Indian banks can act as POPs, but ideally you should choose a bank that's already hosting your NRI account. NPS is under Exempt-Exempt-Taxstructure. So, all contributions and accrued capital gains are tax free, but withdrawals are subject to tax. As per current tax rules, at retirement, a withdrawal of up to 40% of the total corpus as a lump-sum will be tax-free (while 20% will be taxed according to your tax slabs if you go for the maximum lump sum withdrawal limit of 60%). Income from annuity will be taxable as per your tax slabs. The proceeds of NPS scheme, either the lump sum or the annuity, will only be paid in Indian currency. There is no restriction on repatriation of accruals, whether it's annuity or lump sum.

38. Are NRIs allowed to invest in PPF? • No, NRIs can not invest in PPF (Public Provident Fund). If you already had a PPF account before you became an NRI, prior to Oct 2017, you are allowed to operate it till it matures. • Earlier, as per notification G.S.R. 1238 (E), dated Oct 3, 2017, as soon as you become an NRI, your PPF was deemed to be closed and your money accumulated till then was supposed to start earning interest rate applicable to post office savings account. • However, the good news is that the aforesaid notification has now been put in abeyance once again as per a new communication (dated Feb 23, 2018) by the ministry.

39. Are NRIs allowed to invest in Post office schemes? • No, NRIs can't invest in post office savings schemes. • This essentially means that they are barred from investing in instruments like National Savings Certificates, PPF, SukanyaSamriddhiYojana, Post Office Monthly Income Schemes or Post Office Time deposits.

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