What's the smartest way for NRIs to build assets in India?

Planning to invest in stocks, mutual funds or GIFT City products? Here's how they compare

- Sashind Ningthoukhongjam

The Indian growth story isn't just a headline—it's a lived experience. The moment a non-resident Indian lands in Mumbai, the Adani Group welcomes them with world-class airport infrastructure. Step outside and there's an Ola cab waiting. At dinner time, Tata salt on the table reminds them yet again of an Indian company's dominance in the growing economy.

India's growth story continues to attract NRI investors. If you're looking to invest in Indian markets, the first step is choosing the right route—stocks, mutual funds, or the GIFT City option. Here's a look at the pros and cons of each.

Demat account

Before applying for a demat account, NRIs first need to sort out their bank account. When an Indian resident turns NRI, they first need to convert their bank account to a non-resident ordinary (NRO) account. They may also open a non-resident external (NRE) account if they wish to manage their foreign earnings in India. The funds in NRE accounts are freely repatriable to foreign countries, while those in NRO accounts have certain restrictions. Note that existing resident accounts cannot be converted to NRE accounts.

PIS and non-PIS accounts

For NRIs investing in India, understanding the difference between a Portfolio Investment Scheme (PIS) account and a non-PIS account is essential. These account types determine how NRIs can access Indian financial markets, especially for investing in stocks and securities.

A PIS account, regulated by the Reserve Bank of India (RBI), is specifically meant for trading in Indian stock markets—buying and selling shares and convertible debentures on recognized stock exchanges. It enables repatriation of funds through an NRE account, though with certain restrictions. Not all banks offer the PIS facility, and opening one requires RBI approval and a relatively cumbersome documentation process.