Investment Opportunities in India

August 29, 2011

Invest in real estate to reap lucrative returns

Real estate is booming now and booming high! Real estate investments have become really advantageous as well as appealing and have taken the driver’s seat in the race of lucrative returns. Considering the situation of today one can emphatically state that investment in infrastructurehas more and better profitable returns than any other business. But again as this too is affected by the external forces, especially the markets, one cannot neglect the risk, it too has inherent.

  • Less risky: The risk involved in this type on investment is less when compared to that of any other types of investments. Real estate investment has always brought in much more gains if it is taken and considered in the right spirit as it should be with the right amount of sagacity and seriousness. Few of the socio- economic factors like place and position, behavior of market, density of population, history of land etc, are responsible for making this endeavor a less risky one.
  • Heavy starting capital is not required: With the wide array of loans available nowadays, buying an new property or land has become all the more easier. Housing loans, which have come up nowadays are great means for even a middle class man to start making real estate investments.
  • Sharpen your investment skills: Buy a plot of land and you would feel what it means when you own a piece of land brought with your hard earned money. Gradually by buying and selling property you would learn what investment is all about and what are the few intricate details which are essential when you invest your hear earned money into anything.
  • Real estate is never a time consuming investment technique: This never drains out all your savings stock or your energy at one shot. Timing is the important keyword which is essential, and would gradually grown within you once you slowly take this up as a part time then a full time investment option.
  • Land value appreciation: Inflation is something which has become the part and parcel of one’s life, but what has been generally noted is that, the appreciation values of land is much more than even inflation! So no doubt real estate it is a lucrative option.
  • Availability of tax exemptions: An individual avails a lot of tax exemptions on his investment –income-property. The tax exemptions which are obtained through the real estate investments are much more when compared to any other type of investment. With the other investments, you tend to lose on various types of investments at your bank due to inflation and the huge taxes which could be imposed, but this never happens with the real estate.
  • The increasing demand of land: Earth has two thirds water and one third land, and with such rise in population, it is obvious that scarcity of land would increase as days would go by. Thus with the increase in population, the availability of useable land decreases, creating increasing demand for it. Thus, as per the demand supply theorem, the price value of the commodity would mount due to this excess demand.

So folks think of real estate investment seriously if you have some extra bucks lying in your bank!

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August 23, 2011

A Brief on the Various Investment Sectors in India

India is rushing at a rapid pace in the industrial development, globalization and structural reforms. Research shows that 2010 experienced the fastest growth ever and it is expected to increase from 9 to 9.5 per cent between 2013 and 2015. Hence investment sectors in India are opening the doors to the non-residential Indians even more who are interested to invest in the various sectors of their homeland. However, it is necessary to take care to give assurance to the NRI so that there is a continuous flow of money into the country.

There are various sectors that are developing rapidly and so NRI investments too are more in those sectors. According to economists NRIs usually send money to India for their parents and dependents. Hence they wish to build a home and thereby invest in property. Developers and contractors are planning their projects to suit the tastes of NRI investors. The luxurious apartments are often built for the parents of an NRI who will come back to his homeland later on. However the present trends show that NRI investment in buildings and flats are also for the purpose of rental value and the earnings that they will bring in. The value of property is always soaring especially in this world of population growth. So NRI Investments in property has also become quite common.

Coal is one of the leading fuel suppliers in India. Coal has helped a lot in the industrial heritage of India. So investing in this field is considered fruitful by some people. India occupies the 5th rank among the biggest economies in the world. So NRI investments in India have gained quite a lot of importance. The increasing financial system and diverse industries are welcoming more investment opportunities for those living outside India but have their hearts here. Some of the top investment companies in India are attracting foreign exchange due to favorable locations, investment markets, technical partnerships and financial firms. Investment sectors in India has a massive work force and is hence famous for expansion and competitive markets.

Some of the well known companies that attract NRI investments in India are namely Tata Investment Corporation, Shah Financial Group, HSBC Asset Management India Pvt. Ltd., Bajaj Allianz, SMC Investment Solutions and Services, Stanrose Mafatlal Investment and Finance Limited and many others. The NRI population can invest in stock markets also. There are no problems if they invest in this field. They can directly invest in the Indian Companies through their own demat accounts. There is a procedure of starting investments by NRIs in India. They need to open a demat account, register with a broker, continue all transactions through the authorized banks listed for NRIs by the Indian Reserve Bank and any change of address like if an NRI shifts to India and becomes an Indian resident then he has to inform the bank and submit all relevant details.

Study the Investment Trends and Reap Huge Gain

If it is anything related to getting financial security then investing is the wisest and the most important decision to be considered. It is better to initiate the investment practice as early as possible, as that is how the money will multiply to a huge amount along with you ageing gracefully. Nowadays most of the Indian youth draw quite a hefty sum of money and all the credit goes to the industrial sectors comprising Information Technology, ITES , BPO and similar others which are creating great opportunities with each passing day. This is turn creating options for the mass to save more money and invest them in proper channels. Investment is indeed a crucial element and hence, one should study the prevailing Investment Trends before investing in a particular sector, as the main aim should be balancing the risk and the returns. The basis of investment should be very authentic as often people avail the option to invest in the private firms considering the lucrative offers of high interest rates and so on but it might be the case within a while the firm vanish altogether leaving the individual tormented by losing all the money invested. Here are few tips for the individuals, who are fresh in the investment arena.

Life Insurance
The Indians take the option of investing in insurance very seriously and the organisation, on which they depend to the utmost, is the Life insurance Corporation of India (LIC). This is an undertaking of the Government of India and is the undaunted market leaders in the field of insurance in India. The other popular market players include Tata AIG Life, HDFC Standard Life, Bajaj Alliance Life Insurance, Kotak Mahindra, Birla Sun life, Aviva Life Insurance and several others.

Bank Fixed Deposits
If you will study the Investment Trends over a favourable period then you will find that one of the commonest methods of investment is put your money secured as Fixed Deposits (FD) in bank. This kind of investment comes with little risk but at the same time the rate of return is also not very high. The tenure offered by various banks range from 15 days to 5 years. Every bank including the nationalised, private and co operative banks have options for fixed deposits. The schemes offered for FDs are also many and have features such as, auto renewal, free credit card with FD, cash certificate, easy FD and many others.

Gold
If someone is looking for long term investment then investing in Gold is one of the best options. The average rate of appreciation for Gold every year is 17% approx. And even when the rate of inflation ranges from 4%-6% then also Gold tend to yield great returns. It is always wise to invest in Gold coins or Gold bonds, as Gold in form of jewellery might lead to wastage of money in making charge of the ornament.

Real Estate/Property
At present the prices of property is doubling up in 2-3 years. Therefore, it is safe to invest in property as it will provide good return. So, if one can buy individual house or flats in prime areas or even in suburbs, then the value will surely get appreciated during the next few years. So buying properties in the major metros, such as, Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Kochi and the such others is a wise way to invest.

Shares and Mutual Funds
This is one of the risky options to invest but often yield high returns. It is better to study the market trends and collect the information on the company one is investing in. Investment in shares gives the option of Investment in Indian Businesses.

The other popular options include investing in Postal Saving schemes, National saving certificates and in Public Provident Fund and in bonds, company FDs, chit funds and others.

The recent trends in the investment scenario reveals that majority of Indians are in taking up FDs, real estate, life insurance and even Investment in Indian Businesses as the common investment purpose.

August 12, 2011

Inheritance of agricultural land by NRIs

Indian Laws governing the investment opportunities by NRIs are governed by Foreign Exchange Management Act, 1999 (FEMA), according to which NRIs and PIOs in India (non-resident Indians and Persons of Indian Origin) are prohibited from buying agricultural land in India. Under the general permission granted by Reserve Bank of India, properties other than agricultural land, farm house and plantation property can be acquired by foreign citizen of Indian Origin provided the purchase consideration is met either out of inward remittance in foreign exchange through normal banking channels or out of funds from the purchaser’s NRE (Non Resident External Rupee Account) or FCNR ( Foreign Currency Account) accounts maintained with Indian banks. The reason relating to the prohibition clause, about agricultural land is mainly to protect farmers from foreign conglomerates looking to buying up agricultural land.

Indian NRIs cannot buy agricultural land in India and this is applicable to the whole of India. Approval is required from the Reserve bank of India which one can assume is not easily available and this would depend only on individual circumstances. In addition to that, some State Governments in India have rules that allow only farmers to buy agricultural land in their State and this restricts even Indian citizens from buying agricultural land unless they come from a family of farmers. Therefore, one cannot complain that due to the above prohibition, NRI investment options have been mitigated. On the other hand, NRIs who have acquired foreign citizenship, are sometimes mislead into believing that they cannot continue to hold agricultural land as foreigners cannot hold agricultural land in India. But this is not all encompassing, because Indian NRI’s can continue to hold agricultural land or any other property they own in India provided they had acquired them legally before accepting foreign citizenship. NRIs and Foreign Citizens of Indian Origin cannot acquire agricultural land, even by way of gift. However they can acquire agricultural land by way of inheritance and an agricultural property or land thus acquired can only be sold to a resident in India and not to an NRI.

Just like every cloud has a silver lining, therefore, even if it seems like there are a lot of obstacles involved in the process of inheriting an agricultural land as an NRI, but eventually, the initiative generates one of the biggest advantages eliminating the hurdle of paying any inheritance tax for NRIs. Also, NRIs can sell the inherited agricultural land to a resident Indian, but they will have to pay capital gains tax on the sale proceeds. Once the tax is paid the remaining sale proceeds can be remitted abroad which again should not exceed 1 million USD in any financial year. Therefore, these are a few attributes an NRI must keep in mind while deciding on investment strategies to the best of their suitability.

Therefore, the conclusion lies in the fact that, inheritance of agricultural land is not covered by the ban on NRIs, but in fact it is an exception to the rule.

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