Investment in India

Business Opportunities for NRIs in Indian Market

India is the largest democracy in the world. The country ranks second in the world in terms of total population. The liberalisation and globalisation of the Indian economy has led to more foreign direct investment (FDI) inflows in Indian markets. As a result, the scope for business in India has increased.

There are plenty of business opportunities in India for Foreign Investors, Non-Resident Indians (NRIs), Persons of Indian Origin (PIO) and Overseas Corporate Bodies (OCBs). The country offers liberal policy regime, along with easy availability of loans, funds and various other initiatives, which makes India a lucrative investment destination for NRIs and PIOs.

Some of the promising sectors where NRIs may invest include power, pharmaceuticals, mining, hotel & tourism, coal & ignites and other infrastructural projects. NRIs can also invest directly in Indian real estate except buying agricultural lands or plantations. They can look at huge number of central and state sponsored projects in key infrastructural sectors like education, healthcare and construction for higher returns.

Business Opportunities in India

Some of the major factors that help businesses in India to flourish include:

• High number of people with disposable income, emerging middle class, low cost competitive workforce, and investment friendly policies
• Availability of rich natural resources
• Availability of a considerable section of population proficient in English
• A well-established banking system consisting of public and private banks and other financial institutions
• Competitive advantage in Information Technology, which can be used to enhance productivity in Industries
• Improved infrastructure for business ventures

Steps for NRIs /PIOs to start business in India

• Applying and getting PIO card (Person of Indian origin) - to make investments in properties, etc
• Getting permanent account number (PAN card) from the Indian tax department, making it smoother to undertake all business and investment transactions above Rs. 50,000
• Selecting a right and highly profitable business in India among various available options
• Selecting an experienced person/ business professional to plan business and investments
• Selecting a business partner in India and start a business

Investors can also take the help of business incubators and facilitators to become established and sustainable during their start-up phase. Business incubators are programs designed to nurture the development of entrepreneurial companies. They provide the companies with business support services, business advice, assistance with business planning, market and international networks, and also help in obtaining finance. Incubators usually offer companies rental space with flexible leases, basic office services and access to equipments all under one-roof. Successful completion of a business incubation program increases the chances of a start-up company to stay in business in India for long term.

Government Initiatives

To attract foreign investment into India, the Government is offering several facilities to NRIs, PIOs and OCBs. The economic reforms have brought policy changes in terms of ease of entry, investment, location, usage of technology, import and export. These changes have created an investment-friendly environment, which results in more business opportunities in India.

NRIs are permitted to open bank accounts in India with funds remitted from abroad, foreign exchange brought in from abroad or with funds legitimately due to them in India, with authorised dealer.

Further, the Reserve Bank of India (RBI) has granted general permission to NRIs/PIOs, for undertaking direct investments in Indian companies under the automatic route.

NRIs Investment Options in India

India offers a stable, prosperous foundation to grow one’s business. It offers rich business opportunities and markets to non-resident Indians (NRIs) for new products and services. It is one of the fastest, easiest and lucrative investment destinations in the world to set up business. India is the second-most profitable destination, according to UNCTAD's World Investment Prospects Survey 2010-2012.

India is in the midst of rapid economic and social transition and is giving a feel good factor to the NRIs, especially the real estate sector. Returns from real estate investments in India have consistently performed well and have even outperformed other investment options. The Government of India has created many policies and schemes to maximize opportunities for NRIs looking to invest in Indian real estate sector. The rules have been liberalised to attract more and more investments. The Reserve Bank of India (RBI) has allowed, both people residing outside India holding Indian passports and also person of Indian origin (PIO) to invest in residential as well as commercial properties in India. The purchase can be done out of funds remitted to India through normal banking channels or funds held in certain types of accounts in India. NRI can freely invest in any partnership or proprietorship firm (not engaged in agriculture/plantation/real estate) on a non-repatriable basis. The sale or transfer of shares and debentures to Indian residents is permissible.

The Government also offers huge investment opportunities in government securities, Unit Trust of India (UTI), National Saving Certificates, shares and mutual funds. NRIs/PIOs are permitted to invest in the foreign direct investment (FDI) scheme on a repatriation basis in equity shares/ Compulsorily Convertible Preference Shares (CCPS)/ Compulsorily Convertible Debentures (CCDs) of an Indian company. They are also permitted to make portfolio investments. The RBI has granted general permission to NRIs/PIOs, for undertaking direct investments in Indian companies, under the automatic route purchase of shares. The ‘24% Scheme’ permits Indian companies, apart from those operating in the agricultural sector, to issue 24% of their debentures and shares to NRIs with repatriation benefits.

The health care sector has also opened new business opportunities for NRIs/PIOs to invest in India because of the rise in disposable income, penetration of health insurance and unhealthy lifestyle of present generation.

With a huge agriculture sector, abundant livestock, and cost competitiveness; India is fast emerging as a sourcing hub of processed food. The food services sector in India is expected to witness a 50 per cent increase in investments in 2012 to about US$ 750 million, as food suppliers and retail companies plan to scale up business and stay competitive by tapping the large potential of the domestic market.

There are many other exciting business opportunities in India, especially, for entrepreneurs dealing in outsourcing technology, internet ventures, software development, e-commerce, etc.

Government’s intervention on policy issues, especially, tax regulations and FDI in sectors like retail, aviation etc. will play an important role in driving large transactions, especially, inbound deals. India’s growth story remains intact and NRIs/PIOs can look forward to see better investment options in 2nd half of 2012.