NRIs favour real estate over stocks

Primary objective of the Overseas Indian Facilitation Centre (OIFC) was to lead Indian diaspora up the investment avenue, but one would certainly not have expected real estate to be the area of greatest interest. At least, not one in which NRIs would want OIFC help. But that’s exactly what’s happened.

We are getting a lot of queries from overseas Indians about investing in property in India. OIFC, a one-stop shop to help overseas Indians invest in India, was launched by the Ministry of Overseas Indian Affairs (MOIA) on May 28. The CII is the private sector partner and host institution of this not-for-profit trust.

According to initial trend, real estate tops the list in terms of interest shown by overseas Indians while stock market investments come second.

With the surging demand for investment in real estate from domestic and overseas investors, real estate investment trusts when operational in India would enable a larger number of players to participate in investment grade buildings. These are currently worth $ 83 bn in India.

Currently, Indian REITs are entering the Singapore market. Ascendas India, the Business Park developer has already applied to the Monetary Authority of Singapore to raise $357m to invest in integrated real estate projects in India.

DLF and Unitech are also deliberating on this option. While Unitech is going in for an overseas listing, DLF Assets has kept its options open for an Indian listing if the trusts are allowed to operate in the next 12 months.

Bangalore’s Real Estate Bank International (REBI) has ambitious plans to reach out to overseas markets with an investment of Rs. 250 m, reports NRI Realty News.

Offices in Sri Lanka, US, UAE, Singapore, Malaysia and Australia will enable real estate services to reach out to non-resident Indians, while REBI’s domestic network will be expanded to 3000 franchises over the next three years.

Pearl Global is also venturing into real estate, as it ties up with Ansal Properties to develop 9.26 acres of commercial land in Gurgaon.

Earlier this month, the Bhoruka Group from Bangalore announced its intention to diversify from its existing power generation business to develop a premium residential project in south Mumbai. The defunct Mukesh Textile Mill property, covering 10 acres will be the site of the new project. The company will also construct an IT Park on 34 acres in Whitefield, Bangalore.
Kolkata based Bengal Shrachi Housing Development in a joint venture with two NRIs has announced the launch of a housing complex, Rosedale Garden, specially designed for non-resident Indians (NRIs). Tapping the desire for fully furnished ready-to-move in apartments for NRIs, the joint venture has invested Rs3bn in this mega project.

Premier realty firm Parsvnath Developers Ltd is set to develop their existing land bank over the next five years by investing over $4 bn. Launching over 100 real estate projects in all its segments, they aim at developing their saleable land bank of 153m sq feet.

They have six projects lined up for Delhi metro as well. Speaking in terms of growth, the company had reported a profit of Rs 2.92 bn in the financial year 2006-07 at an annual growth rate of 110 per cent.

The real estate sector has recorded commendable profit margins, evident from the profits posted by major real estate developing giants in the first quarter. The first quarter was beneficial for almost all real estate developers. Parsvnath Developers posted a record net profit of 179.56 per cent at Rs 1.02 bn against its previous Rs 365.5 m.

Unitech on the other hand has been registering a consistent growth of 8.6 per cent for the last four years. Ansal Properties and Infrastructure Ltd. (Ansal API) reported a net profit of 16 per cent.

Indian realty is growing at 30 per cent, particularly in Tier II and Tier III cities. The $15 bn realty market is expected to reach $ 90 bn within the next eight years. Chandigarh, Gurgaon, Vizag, Coimbatore, Kochi, Jaipur and Nagpur are some Tier II cities witnessing unprecedented boom.

Research has it that realty can give an average return of eight per cent. Realty prices are doubling in some Tier I cities like Bombay, Chennai, Bangalore etc. Residential prices have gone over Rs 5,000 per sq feet and commercial prices are over Rs 10,000 in Tier I cities.

NRIs may rival MNCs as investors in Indian economy

The single-largest source of foreign capital into India, non-resident Indians, may one day become the prime source of investment in the domestic economy. A new report on remittances to India says "NRIs now see India as an investment destination" and are already leaving their mark in real estate and the stockmarket.

Muzaffar Chishti of the Migration Policy Institute, author of "The Phenomenal Rise in Remittances to India: A Closer Look," says the most striking evidence of the fact that NRIs are seeing the Indian economy as an opportunity is the rise of so-called "private transfers."

There are two main types of NRI remittances. The most well-known type is "inward remittance" i.e. when an NRI wires or sends money to an individual in India, usually a relative. The other type is "private transfer" i.e. when an NRI deposits foreign exchange into a rupee account and then spends it inside India.

The little-noticed trend, says Chishti, is how fast private transfers have grown. Between 2000-01 and 2005-06 private transfers grew by 88 per cent, more than double the rate of inward remittances. The former exceeded the latter by $ 2.3 billion last year.

The other trend is that North America, by far, is the largest source of remittances – 44 per cent of the total. The Persian Gulf, which once dominated remittances even 10 years ago, is the source for only 24 per cent.

Unlike the traditionally working-class Indian population in the Gulf, the middle-class North American NRIs are more likely to see India as a place for long-term economic investment. Nearly a third of all remittances are over $ 2,200.

In other words, NRIs are bringing in billions of dollars, converting them into rupees and personally spending them inside India. Chishti cites real estate experts as saying 20 per cent of all properties being sold for over $10 million in Delhi are being bought with NRI funds. "In the end, no one knows where or how much NRIs are investing in India," he says.

The amount of money concerned is enormous. Last year remittances to India totalled $ 24.6 billion, more than foreign direct investment or foreign institutional investment. Private transfers, which overtook inward remittances only in 2003-04, alone totalled about $ 13 billion last year. India received $ 15.7 billion in FDI equity flows during the same period.

The amount of money NRIs are transferring is still growing. Western Union, the world’s largest wire transfer company with $ 4 billion in revenues, says it saw a 102 per cent increase in person-to-person remittances to India last year.

NRI investment in India, believes Chishti, is a vote of confidence in the new Indian economy. In the past, India’s rigid foreign exchange controls, the volatility of the rupee and the lack of growth meant NRIs would keep their money in repatriable foreign exchange deposits rather than convert their money into rupees.

Another factor was 9/11 which drove some remittances out of the informal hawala market. Western Union, for example, experienced a surge in money transfers to South Asia as anti-terrorism finance laws were introduced across the world.

Chishthi is critical of the government’s lack of imagination on using NRI remittance for development purposes. For a while the surge in personal transfers was explained away as being overseas Indians cashing in various NRI-targeted bond issues.

THE NRI EYE: Gulf investors bullish on India

India is fast becoming a favoured investment destination not just for its own diaspora, but also for institutional investors from the Gulf region. The most attractive avenue for major Arab players seems to be real estate.

Investment pouring into India’s hot property market from the Gulf region have crossed the $35bn mark, says The Economic Times. The combined value of the various real estate projects being developed by Gulf-based real estate firms has touched $37 bn.

The Gulf’s oil-fuelled current account surplus will hit $227bn this year, according to the Institute of International Finance, and that money is looking for a home. With domestic real estate markets saturated and the west seen as increasingly hostile by some, Gulf investors are turning to India’s emerging property market.

Gulf investors know India well, explains Richard Dean in The Financial Times. The country’s financial centres are a short flight away and many of the professionals managing Gulf money are Indian expatriates. Their intention is to develop the projects in which India’s fast-emerging middle class will live and work.

So far the Reserve Bank of India (RBI), the country’s central bank, has restricted foreign investment in property, fearing that an influx of funds could stoke inflation. But the finance ministry worries that stalling investment could stunt India’s growth and the balance appears to be tipping in favour of allowing more money in.

Fuelling this growth are companies like Emaar MGF, which announced its plans to develop SEZs, residential projects, hotels and malls and hospitals in the country at an investment of $12bn. Earlier this year, leading real estate developer DLF tied up with Nakheel to develop two townships in the country at a cost of $10 bn.

Similarly, Dubai-based developer ETA Star Properties announced a month ago its plans to develop a $923m IT park at Chennai, taking the group’s total investment value in India to $4.35bn so far.

Global Asia Real Estate, Dubai Properties, the Signature group, the Palmon group are some of the names that have so far made firm commitments to invest in the local property market.
In yet another instance, the UAE-based Palmon group invested $9.5m in Mumbai’s BSEL tech park. It is scheduled to invest in other cities such as Bangalore and Hyderabad. BSEL Infrastructure has other projects in Maharashtra and Gujarat and recently got contracts worth $134m for developing shopping malls in Nagpur.

Meanwhile, Dubai-based asset management firm Signature group is learnt to be close to launching several real estate funds for investment in the UAE and India, totalling over $650 m.
Istithmar, the private equity arm of the Dubai government, is also bullish on making investments to expand its horizons in the hospitality sector and other infrastructure projects in India. The company holds a global real estate portfolio estimated at $7-$8bn. Also, it was in holding high talks to buy Asian property assets worth at least $250m and expects to enlarge its portfolio by this year’s end.

Institutions all over the Gulf have predicted a bright future for investments made in India.
Kuwait Investment Company (KIC), for instance, sees an increase in GCC investment into India in the next three years. According to data released by the company, a major part of the investment will see its way to Indian real estate.

For the past few years, Indian realty has been a common hunting ground for large institutional investors investing high values, a trend which is expected to shape further.

Gulf Finance House (GFH), a leading investment bank, and lead financial advisor to Energy City Qatar, plans to buy 600 acres in Navi Mumbai to set up India’s first integrated energy business district — Energy City India — with an investment of $2bn. The project will come up within a few kilometres of an upcoming international airport in Navi Mumbai.

First Click For NRI Investors

When an NRI wants to invest in India, what is his first step? Look for opportunities in India through different government bodies promised as 'a one-stop shop'. As if all the existing bodies to attract investment were not enough, the ministry for overseas Indians launched a new one last week - the Overseas Indian Facilitation Centre (OIFC).

Exploring on the Net, the NRI will come up with many different sites of the Indian government crying for foreign investment in India, especially from NRIs. Frustrated by India's red tape, NRIs want 'a single window' to handle all their queries and hold their hand until they get the approvals.NRIs have been promised and provided 'a single window' to invest in India time and again.

Much before the Internet and since the days of forms that were filled up by hand, the one stop point of contact for NRI investors has always existed in one form or the other.All these government-run facilities, as part of different ministries, remained overburdened with red tape and bogged by infinite delays. Over time, they morphed into new ones promising to be better - and faster - than before.

This has happened at both the central and state government levels. Every new government that takes power in New Delhi or in states wants to boost investment and so investment promotion with foreign tours is the first priority.Just search the web, and an NRI will find dozens of groups all out to assist him to invest in India.

The Indian Investment Centre, a government body with more than three decades of rich experience in investment promotion, is the first contact point and is the single window agency for authentic information or any assistance that may be required for investments, technical collaborations and joint ventures.All its services are free of charge, claims its home page. Of course, it has a special section for NRIs who are offered 'escort services' that include match making, arranging meetings and forwarding applications.

The ministry of commerce and industry is responsible for foreign direct investment (FDI) in India and has a unit to promote investment. The Foreign Investment Promotion Board under the finance ministry approves the investments. The approved projects are listed regularly.Then most state governments have an investment promotion centre as a separate body or a part of one of its ministries. These can also be accessed on the Internet. So what is special about the latest body to tempt NRIs to sink their money in India?

Private sector partnership!This can perhaps be expected to be more efficient as it has the Confederation of Indian Industry (CII) in partnership with the ministry of overseas Indians and is meant for NRIs and not large businesses.The CII organized the Pravasi Bharatiya Divas this year for NRIs and the event showed some improvement in achieving its aims. One of the demands made by NRIs was the creation of a centre where their abilities, qualifications and experience could be harnessed for India's progress instead of merely attracting their funds.Within five months, this demand has been answered with OIFC.

Its website, www.oifc.in, has almost the same information as the other investment promotion sites like India's economic progress. But the section on 'Opportunities in India' is a misnomer. As one goes to it to get a list of potential investment projects, one finds snippets of interesting economic information like 'India has more billionaires than China'! Surely, CII can do much better than this!The centre, through its website and offices, will provide reliable data on investment opportunities free of charge and assist in getting individual projects cleared as a paid value added service.

If the investment opportunities are free, it is hoped that these are listed on its site soon since CII should have a database of these projects both state-wise and sector-wise.The centre will provide 'authentic and real time information', promised Minister for Overseas Indian Affairs Vayalar Ravi. This will include consular and financial services and related advice.

The centre will screen the opportunities available in the country before listing these for NRIs so that they do not fall prey to "fly-by-night operators" and cheats, said Ravi. Thankfully, the centre will be managed by CII and will operate as a non-profit trust.In June, CII is holding a meeting with about 100 NRIs in the US to inform them about this centre in partnership with industry.

India hopes to attract $32 billion investment this year.NRIs remitted $23 billion last year mostly for their family members. Will they invest more after their first click at this new site? Only time will tell.

Process Of Investment in India For NRIs

When India looks for investments in various sectors, among others, it turns to the NRIs, the case in point being Resurgent India Bonds. The process of investment into India has progressively been made simpler and in many cases, no permission from the RBI is needed before investing in India.

However, before we discuss the actual process of investment for the NRIs, let us look at some of the issues faced by the NRIs when they invest in India currently. Investing in India is typically a one time event every year when they come to India. Massive mis-selling occurs due to time pressure and the need to close a deal.

The ‘MUST’ list

>>Get a PAN as it’s the most important document required by NRIs.
>>Open an NRE account to maintain repatriability of the funds invested in India.
>>Have a local representative to invest in illiquid assets.
>>Find a financial advisor to get legal and international tax advice.
>>The financial planner should help the NRI develop a long range financial plan for investment of his assets and insurance needs

Process of investing in India

Get a PAN: The most important document or registration required by NRIs is the Permanent Account Number (PAN). This is available to many first generation NRIs as a legacy of their stay and working in India. Getting a NRI PAN card is easy with the private PAN facilitation centres, which issue PAN within a few days.

Opening a banking relationship: Since all the investing transaction require a banking channel (buying and selling, parking funds, etc), opening a bank account is the next steps. Banks are more than eager for NRI accounts since they tend to maintain higher balances and offer great opportunities for cross selling. Open an NRE account to maintain repatriability of the funds invested in India. Banks allow NRIs to nominate a local representative who has the “mandate” to operate the banking account on their behalf.

Appoint a local representative: Investing in illiquid assets like real estate might require the NRI to appoint someone in India as his local representative. The NRI needs to give a “power of attorney” to the local representative detailing the powers that the representative can exercise on behalf of the NRI.

If the NRI does not want the hassle of writing cheques to his insurance company or to his mutual fund company, he can give his local representative the right to sign, invest and redeem on his behalf.

Identifying a financial advisor: Similar tests apply for the NRI when it comes to choosing a financial advisor. He needs to find someone who can win his trust. He needs to look at the ability of the advisor to service him. The client should not be too large or too small for the advisor.
Look at the ability of the financial advisor to provide legal and international tax advice. This can be important, especially since the NRI might do many transactions “sight-unseen” and across tax-geographies. In case of professionals, if the company has accredited financial advisors, then the professional knows where to go.

Deciding on asset allocation and insurance needs: The financial planner should help the NRI develop a long range financial plan for the investment of his assets as also for the insurance needs of the client. While it may not always be feasible for the advisor in India to research the market dynamics across the portfolio of his client, he should have a basic understanding of the risks on his client’s portfolio. Depending on the long-term needs of the client, the advisor needs to decide his India and Indian rupee allocation.

Understanding of the local laws (including taxes) and customs: There can be many quirks in the local law that the NRI should know. For example, while repatriation of sale proceeds of house property is allowed, it is limited to two such repatriations per individual. Similarly, capital gains bonds are available only up to Rs 50 lakh per person per year.

In case the NRI has made larger capital gains, he will need to pay the tax on that or reinvest in another property. Similarly, an understanding of the local customs can go a long way in helping the NRI set expectations correctly. While there is increasing professionalisation on the real estate development, there are many cases when the projects take much longer to complete.

Source: Economictimes

NRIs May Face 3 Year Pre-IPO Realty Lock-In

The government is planning to plug another potential source of foreign funds for the real estate sector. Non-resident Indians planning to invest in real estate projects ahead of initial public offers could face a three-year lock-in along with foreign institutional investors (FIIs).

The government is planning to introduce a lock-in for pre-IPO FII investors in realty companies in bid to prevent a possible real estate bubble. The restrictions are also aimed at checking sudden flight of capital.

By putting a lock-in period for NRIs, the government could also effectively discourage the promoters' own funds coming into the company through the NRI route. Indian promoters are generally known to use NRIs as fronts to get their own money abroad invested in their companies. A lock-in period might act as a deterrent for promoters bringing such funds through the NRI route.

The government is likely to amend the Foreign Exchange Management Act to make all pre-IPO investments face a three-year lock-in, a government source said. However, the other conditions such as minimum capitalisation and area of development will be limited to foreign direct investments.

Real estate companies which are planning to hit the capital market will have to tweak their plans to meet the proposed norms, expected to be notified shortly. Some real estate companies that have sought permission for making pre-IPO placement to FIIs have been told to wait till the government finalises the foreign investment norms for the real estate sector.

Up to 100% FDI is allowed in realty projects with certain conditions like a three-year lock-in on investments, minimum capitalisation of $5 million and development of at least 10 hectares of land. These conditions are applicable on all foreign investors, including NRIs.

Earlier, there were differences between the Department of Industrial Policy & Promotion and the finance ministry on the treatment of pre-IPO placements. DIPP had favoured treating pre-IPO placement to FIIs as portfolio investment.

However, the Reserve Bank and the finance ministry were of the view that pre-IPO investments by FIIs cannot be treated as portfolio investment and the FDI norms be adhered to. Nearly half of the over $4-billion foreign investments which came in real estate sector in 2006 was through private placements.

Source: Economictimes

Banks Seek Hike in FII, NRI Cap in Hybrid Capital

Banks have asked the Reserve Bank of India (RBI) to review the ceiling on investment by foreign institutional investors (FIIs) and non-resident Indians (NRIs) in perpetual debt and debt capital instruments (hybrid capital)।

According to RBI guidelines, investment in these instruments by FIIs and NRIs are to be within an overall limit of 49 per cent and 24 per cent of the issue। Investment by a single FII and NRI was capped at 10 per cent and 5 per cent of the issue.

This demand was made to the RBI Governor Y V Reddy by a delegation of bankers, including K V Kamath, managing director and chief executive officer,ICICI Bank, V P Shetty, chairman and managing director (CMD), IDBI Ltd, A K Khandelwal, CMD, Bank of Baroda, P J Nayak, CMD, UTI Bank, and Sanjay Nayar, chief executive officer, Citibank, India।

In January, 2006 the RBI had permitted banks to raise capital through additional instruments popularly known as hybrid instruments। This was to let banks shore up their capital in the light of the implementation of Basel II norms. However, the RBI capped FII and NRI investments in these debt instruments.

“The investors in hybrid debt instruments are pension funds, provident funds and large institutional investors looking for fixed returns। The relevance of the ceilings prescribed may be examined considering that the hybrid debt instruments does not constitute any equity participation with ownership/voting rights implications. The ceiling fixed by the RBI has more relevance for equity participation. Since hybrid capital is not purely equity capital, there is a need to examine this aspect,’’ said the CEO of a private sector bank.

“There is a talk of moving towards full capital account convertibility. Under full capital account convertibility such restrictions have to be done away with. If the ceiling set is to ensure that such inflows do not fuel liquidity then the regulator could ask banks to keep the funds overseas rather than place restrictions on investments,’’ said a senior banker.

THE NR EYE: Real estate investments beckon NRIs

The hike in interest rates by the Reserve Bank of India, the ongoing regulatory reforms by the government and enhanced liquidity place non-resident Indians in a very good position to park their excess funds in property back home।

These factors, coupled with the phenomenal growth pattern currently being experienced by the real estate market in India, have not gone unnoticed on the real estate companies which have high expectations of overseas Indians।

India’s FDI climbed to a record-breaking $11।2bn in 2006, a 155 per cent year-on-year increase. Reformed real estate investment regulations for Non-Resident Indians (NRIs) and more crucially foreign investors have provided the impetus to drive the value of the Indian real estate market towards $50bn by 2010.

In 2005, the Indian government announced that FDI in the real estate sector was permitted through the ‘automatic route’, in other words without requiring additional ministerial approvals, streamlining the investment process। Certain guidelines are in place regarding minimum land areas to be developed and minimum capitalisation requirements, but the net effect has been a massive inflow of foreign capital. It is estimated that capital worth $7bn will be pumped into development projects over the next year, much of that emanating from overseas.

The boom is not at all surprising, what with a population of 1।2 billion, growing annually by 1.4 per cent, a cost effective and educated work force and economic growth of eight per cent per annum. These conditions combined with competitive interest rates and a burgeoning IT industry, are driving the demand for not only residential but commercial space that is expected to reach 70 m square feet within three years, with retail developments taking up to an 11 per cent share.

The Indian government now has recognised the demands of NRIs and people of Indian origin to own pieces of property and over a period of time what we have seen is that the investment is both for them to come back and some form of speculation because India as a market now is giving good returns and the economy is booming so a lot of people are looking to come back.
The rules have been much simplified and it has become much easier to buy property for the NRIs। The new act FEMA (the Foreign Exchange Management Act) that is a vast difference from the regulation act (FERA) has made a tremendous difference in acquisition of property and sale of property and even repatriation of money if one has got property and he is selling it of. Overall things have improved for NRIs and it is a great time to be here.

The government of India has granted general permission for an NRI to buy property in India and he has to pay no taxes even while acquiring real estate India but however certain taxes have to be paid if he is selling this property। He would require a PAN card if he has rented out this property and he wants to repatriate that money but if it is going to be a sale of property depending on time or the duration of time he has held the property, the sale proceeds would be subject to capital gains tax and as of now if he has held the property for less than three years then he would be paying roughly about 30 per cent tax and if the property has been held for more than three years then 20 per cent as capital gains tax and that is what he will have to pay.

The list of incentives is quite comprehensive and, for example, allow an NRI to acquire property in India with exception to agricultural/plantation property or a farm house without formal permission। They are also entitled to transfer this property to any resident Indian without the prior permission of any government agency. An NRI can also inherit property of another NRI provided the property in question was bought in accordance with the provisions of the foreign exchange law in force at the time of acquisition.

However, a declaration form for acquisition of commercial property for carrying on any industrial, commercial or trading activity by their proprietary / partnership firm in India is required to be filed with RBI within 90 days from date of purchase।

Money can be repatriated abroad if bought with the foreign exchange earned abroad. That too, only in the sale of two residential properties but any number of commercial properties.
NRIs wanting to park their funds in India are taking the real estate market seriously enough to form informal groups to back select projects। Around 25 million NRIs are investing in immovable property in India, but unlike HNIs and financial institutions they are keen to invest in the housing segment, rather than commercial projects.

NRIs tend to invest in residential properties in India, preferably in their native towns or cities where their relatives and friends can supervise such projects। However, funds are now being put into some commercially viable projects as well, such as malls, hotels and office complexes. Around $600 million has poured in from such investments in the last one year, with a single investment from a group averaging between $10 to 15 million.

According to media reports, Law firms are receiving five to six enquiries every week from overseas Indians who club together and float a fund to build a property, stay on through the lock-in period, and sell it at a good profit।

Jaipur, Hyderabad, Vijaywada, Ahmedabad, Baroda and Surat have seen groups of NRIs making such investments in malls, office spaces and residential townships। These investments are generally routed through Mauritius to avail of tax benefits.

It is a win-win situation for both investors and real estate developers. The former earn handsome returns, while for the latter, it’s low-cost credit. Some projects in smaller cities have yielded as much as 50 per cent returns. The rise in interest rates is bound to bring real estate prices down in a few months’ time, and that would be the ideal time for NRIs to strike.

Online trading Safe for NRI Investors

At a high-profile launch, Indian firm UTI Securities Limited and its associate company in Bahrain, Indo-Gulf फिनान्सिअल सेर्विसस Limited, explained the benefits of their new audience of business figures। Promoting the website usectrade as valuable means for NRIs to oversee their portfolios, investors were told the volume of stock transactions made online will soon overtake that of those conducted through a broker।

"There are a lot of disadvantages in conventional trading, as far as the communication part is concerned," UTI Securities vice-president and e-brokering head Rakesh Singh told the GDN। "Typically a broker handles a number of customers and this can range from 30, to 50, to 100। "Suppose a customer calls a broker at a particular time, but a broker only has three or four lines and if he has 100 customers then 100 people could be calling him at a similar time.

"But in ऑनलाइन त्रदिंग the customer can trade at ease in their home, in a cyber-cafe, or by using the internet in their offices," he added. High returns on investments in recent years have seen the number of NRIs investing in stocks increase, said Mr Singh He said that the new website would offer an easy to use means for investors to acquaint themselves with the Indian market. "It's basically an online त्रदिंग product whereby customers do not have to call any broker or anything, the customer can just log-in to the site and make investments in products ranging from equity investments, to Initial Public Offerings (IPOs) and mutual funds," he revealed.

The site charges a flat ब्रोकेरागे fee of 0.5 per cent including1 transaction costs, a competitive rate compared to some brokerage houses, which charge 1.25pc, said Mr Singh. He said that Bahrain was the financial hub for the entire Gulf region and an upcoming market. "As far as the population is concerned, 25 per cent of the population in Bahrain are Indians, so we are looking out for these customers," said Mr Singh. "There are a lot of NRIs based in all the GCC countries, and the biggest market to date was Dubai, but now Bahrain is going to be the financial hub for the entire Gulf so there will be a lot of investment from here."

Indo Gulf Financial Services Ltd is licensed by the Central Bank of Bahrain as a category two investment business firm. Mr Singh outlined ambitious plans for the firm, revealing it had set itself the target of having 500 NRI customers in Bahrain after one year, and giving an insight into the growing influence of online trading. "In 2003 the online trading accounted for only four per cent of the market, and now it has increased to 27pc," he said. "At the moment, there is a 100pc increase every year in the online trading population."

Merrill Lynch vies to be biggest private bank in NRI segment

Global financial services major Merrill Lynch on Wednesday said, it plans to roll out more products for NRIs as it aims to become the biggest private banker catering to the niche market.
"With $360 billion in investable assets, the 22 million Non-Resident Indians are an important growth area for us," Rahul Malhotra, Merrill Lynch's head of India Global Private Client, told PTI.

"We are leveraging the global business by rolling out products and developing talent, which will result in the largest private banking businesses in NRI segment," he added.
The company would also double the number of financial advisors serving Indian clients this year, both within the country and living abroad.

"We plan to grow the clients' assets under management for both onshore and offshore India by 8-10 times in the next three years," Malhotra said.
Merrill Lynch has had a long experience in India through its partnership with DSPML, which gives it a great advantage over other firms as it boosts of both global expertise and local knowledge.

In addition, he said, Merrill Lynch takes a global approach with India and NRI markets, which creates great synergy between the NRI and onshore India businesses.
The company, which recently launched the Global NRI business targeting NRIs across the globe and trust services for resident Indians, also provides a wealth management advisory service.

NRI invest in biggest project of 100-acre condominium complex in Clacutta

NRIs are looking to invest money in real estate india and have put eyes on calcutta.NRI invest in biggest project of 100-acre condominium complex in Clacutta.Uniworld City -New Town's biggest project of 100-acre condominium complex.

-Uniworld City will strive to be the one-of-a-kind worldclass condominium project with 82 apartment blocks of nine to 27 stories.
-The company proposed 4,500 flats to be developed in nine phases that will cost Rs 20-70 lakh.
-Large restaurants with terraces have been suggested for the main plaza to provide an architectural focal point and activate the plaza with outdoor dining areas with 300,000 sq ft of premium built space convenience kiosks, books, music and cafes
-The streets allow for visual connections and easy transitions from private to public areas
-Added wide variety of apartments in terms of the number of bedrooms and area to cater to different choices and budgets.
-Three club houses with modern indoor/outdoor sports and recreational facilities
-A boutique hotel with 120-plus rooms and a five-screen multiplex.

The joint venture is between Delhi’s Unitech group, the South East Asian company-Universal Success and UK-based architects- RMJM . Rs 1,575 crore was pledged by Indonesian Salim-Ciputra combine and Bengal Unitech Universal has announced a whopping Rs 3,000 crore investment in an IT space and residential project at Rajarh.

The following companies inolve in this project as the joint venture to complete this project:

NRI Prasoon Mukherjee of Universal Success Group (South East Asian company) said, “This will be the most extravagant development in this part of the world.

Unitech Universal, Gurgaon entered civil engineering in 1974 and specilize in power transmission lines, highways to theme parks, from steel plants to residential developments and from indoor stadiums to hotels.

Forrec of Canada was commissioned to create the destination retail/entertainment development in the form of a low-height, double-storey sprawl. No other consultant group can equal our track record of 48 major built projects in 20 countries, including: Major Theme Parks, Water Parks, Entertainment Centres, Retail Environments, Hospitality, Gaming , Cultural Attractions and Urban & Resort Planning

RMJM, UK based achitects, is working on the project with the cost of Rs 100-crore. It is one of the world’s leading architects, to design the world-class multi-residential project and IT park. RMJM’s design portfolio includes the award-winning architecture for the Olympic Green Convention Centre which will play a major role in the 2008 Beijing Olympics.

Source:nriinternet

NRI group plans biggest FDI in Indian real estate

A US-based infrastructure company on Thursday unveiled plans to invest $1 billion in Indian real estate in what is being billed as the largest foreign direct investment (FDI) in the newly liberalised sector.

Royal Indian Raj International Corporation (RIRIC), a Nevada-based company promoted by people of Indian origin, is firming up plans to build integrated townships and planned cities in the country.

The company has entered into a strategic partnership with New York-based real estate investment banking firm The Greenwich Group International to finance the development of multiple private cities in India. “We have already been working on our inaugural residential project on a 17-acre plot on the outskirts of Bangalore,” said RIRIC CEO Manoj C Benjamin.

“With the Indian real estate sector in transition and recent landmark legislation allowing FDI into it, the opportunity for participation in this formerly closed market is heightening,” Benjamin said. RIRIC said it aimed to take advantage of India’s immense housing shortage by developing large-scale commercial and residential townships in four megapolises - Bangalore, Mumbai, Kolkata and New Delhi.

The company claimed its plans for the next 10 years in India would provide direct employment to nearly 10,000 people and indirect employment to another 40,000. “We have got into a contract to acquire nearly 5,000 acres of land near Mumbai, 3,000 acres near Delhi, 5,600 acres near Bangalore and another 5,000 acres near Kolkata,” Benjamin claimed. He, however, said the final settlement of these deals depended on several factors - chiefly approvals from state governments.Benjamin said Mumbai alone would need anywhere between 180,000 and 200,000 additional residential units in the next 10 years.

India is expected to see an annual shortfall of 20 million housing units till 2011. The $50 billion Indian real estate market is booming and expected to grow at 25 per cent annually. The boom owing to the consumption powered growth of the country’s economy has seen investors planning nearly 250 new shopping malls by 2008, as against just three that existed till 2002.

The central government adopted a regulation in February allowing foreigners to bid for Indian construction projects with local partners and also reducing their minimum land-holding limit from 100 acres to 25 acres. Enthused by the liberalised investment guidelines, a slew of foreign builders are rushing to launch projects in Asia’s third largest economy.

Source :Hindustantimes

Separate NRI investment cell for Kerala tourism

Steps are underway to set up a separate cell to tap the cash-rich non-resident Keralites (NRKs) for developing Kerala's tourism infrastructure, state Tourism Minister Kodiyeri Balakrishnan said here Tuesday.

"Though the central and state governments are doing their bit to promote tourism in Kerala, this will not be enough for the development of tourism infrastructure. For this we should tap the NRKs and a special cell will be created to this effect," Balakrishnan said in the state assembly.

The minister was replying to questions on the steps taken to promote tourism in Kerala.
He said that an Infrastructure Development Finance Corporation would also be set up to look into tourism infrastructure development.

The minister pointed out that the biggest problem faced by the Kerala tourism industry was shortage of rooms."During the peak season Kerala requires around 20,000 rooms and what we have now are a mere 8,000 rooms," Balakrishnan said.

In 2006, the number of foreign tourists visiting Kerala went up by 23.67 percent over 2005 and touched a record 428,534. In the same period, as many as 6.2 million domestic visitors arrived in the state, up by 5.41 percent from 2005.

Balakrishnan said they would promote home-stays in the state to address the increasing demand for rooms.
"Home stay is one area where we could concentrate because it brings income to all. Kochi is already doing well in this front. A master plan for tourism is also on the anvil and this would cover all the issues of the industry," he added.

The minister further said that tourism would soon be part of the school curriculum and that more tourism educational institutions would also be set up.

Source:manglorean.com

Budget: NRI investors get lower returns

More Indians are paying more taxes, the economy is growing at over nine percent, exports are booming and foreign reserves have touched a new record of $180 billion. So Finance Minister P. Chidambaram focused on the poor to lower prices, provide better education and healthcare, offer selected insurance cover and improve infrastructure.

Now that foreign companies are rushing to India and Indian companies are buying out foreign companies, new investment incentives take a back seat. Thus it is no wonder the budget did not have any special provisions to attract NRI investors. However, NRIs, like all Indians, will pay less income tax but also get lower returns on Indian stocks.

NRIs who file income tax returns in India will benefit marginally as the tax exemption has been raised by Rs.10,000 to Rs.110,000; to Rs 145,000 for women and Rs.195,000 for senior citizens. However, the education cess has increased from two percent to three percent on all direct and indirect taxes to finance higher education.

NRIs will get lower returns from their investments in stocks. The budget raised the dividend distribution tax from 12.5 to 15 percent on dividends paid by a domestic company from April 1, 2007. When the education cess of three percent is added, it amounts to over 18 percent. This means the dividend is reduced by over 18 percent on Indian stocks.

Similarly, NRIs investing in a money market mutual fund or a liquid fund would pay 25 percent dividend distribution tax. But not many NRIs invest in these very short-term funds and the return is negligible. NRI tenants occupying any property for commercial use will now have to pay service tax of 12.5 percent. This increases their cost of doing business in India. NRI landlords will not be affected, as they will collect this service tax from their tenants. The budget did not make any provisions for greater individual real estate investment.

To attract NRIs to invest in real estate, the stamp duty should be uniform across the country and reduced considerably. NRIs remit funds through legitimate banking channels and so they are at a disadvantage when the seller demands the majority of the price in cash as the sale price is a fraction of the total price paid for a property. This will bring down, if not stop, cash changing hands when buying and selling property that is commanding steep prices in India today. Since this is not strictly a budgetary provision, the finance minister can issue guidelines to the state governments on this matter. As avid collectors of Indian art, if NRIs sell their art pieces in India, they will have to pay a capital gains tax.

An NRI selling any work of art in India including drawings, paintings, sculptures or archaeological collections will now pay capital gains tax of 20 percent on the net gains or 10 percent on the total price. NRI promoters can enjoy a five-year tax holiday if they invest in economy hotels and convention centres in and around Delhi provided that these facilities are completed before March 2010 in time for the Commonwealth Games in the capital. NRI financiers of venture capital funds in India enjoyed tax benefits known as Pass Through Status for all knowledge-intensive ventures. Now the NRI promoters of these venture capital funds will get tax exemptions only in "truly deserving" ventures such as in biotechnology, IT relating to hardware and software development, nanotechnology, seed research and development, research and development of new chemical entities in the pharmaceutical sector, dairy industry, poultry industry and production of bio-fuels.

NRI promoters may also be taxed depending on their country of residence and its tax treaties with India. If an NRI takes over an infrastructure company through merger or acquisition, he/she will lose the exemption benefit granted earlier. In addition to their bank accounts in major cities with major banks, NRIs can now open NRE/FCNR deposit accounts in selected foreign currencies or in rupees with Regional Rural Banks that are making good progress. NRIs can heave a sigh of relief that their cash withdrawals under Rs.50,000 will not be notified to the authorities. To keep track of cash transactions and 'black money', a banking cash transaction tax was introduced last year for all cash withdrawals above Rs.25,000 and these transactions were reported to the Financial Intelligence Unit.

This led the Income Tax Department to many money-laundering and 'hawala' transactions. This year, the limit of withdrawals has been raised to Rs.50,000. The budget follows the old saying, "If it's working, don't fix it". India is progressing well so the poor should benefit. And NRIs are welcome to contribute - without VIP treatment.

Source:indiatimes

NRI investment route’s not tax-efficient now

Select overseas investors may get to invest in local stock markets by registering with foreign institutional investors (FIIs). The aim is to ensure a minimum issuance of participatory notes (PNs) in the Indian markets, an official privy to the development said.

“Let more foreign portfolio investors come in. But we want investors operating under various umbrellas to come in through the front door and not through subterfuge,” said a senior official. As against PNs, ‘sub-accounts’ have to be registered with Sebi by non-residents on whose behalf investments are made in India by an FII registered with Sebi.

Since Sebi is in no position to verify the antecedents of each of the PN investors, a sensible course would be to pin down the responsibility on FIIs, officials feel. Sebi’s FII regulations will need to be revised as the responsibility of FIIs relating to sub accounts is regarded as a grey area.

The existing norms of a broad based fund (which stipulates at least 20 investors with no investor holding more than 10%) are expected to continue even if changes are carried out. The government has received representations to make NRI investments easier as the current route is not tax efficient vis-à-vis foreign investment coming into India via setting up FII sub account vehicle in a tax efficient jurisdiction.

According to Punit Shah, partner, RSM & Co, "Permitting NRIs to invest through FII/sub-account route would be more tax efficient for the NRIs and will certainly enhance substantially the inflow of investments in India. Sebi should take a pragmatic view in the matter." Investment by NRIs has become more difficult after overseas corporate bodies or OCBs were banned after the last stock market scam.

However, letting 20 or more NRIs set up a sub-account on a discretionary basis — where the money will be managed by the FII and not the NRIs — has to be allowed, keeping in mind the present regulation that NRIs cannot hold more than 24% in a local company. Till now one of the reasons for not encouraging NRI sub-accounts was to ensure that this investment cap is not breached.

Source: economic.timesofindia.com

THE NR EYE: Punjab attracts NRIs in many ways

They may not yet have any telling impact on the elections, nor have they yet fully realised their potential to invest in their state, but it is visible now that non-resident Punjabis are more interested in home affairs than before.

Some may attribute it to the overall effect that India's growth story is having on all non-residents. Others, might point towards the likelihood of NRIs getting voting rights. And then there would be those who might credit the government efforts for this. But, certainly, the intrepid global Punjabi, known for his uncanny ability to reach green pastures, is now looking homeward. Recently, hot on the heals of the Pravasi Bharatiya Divas - 2007, the International Punjabi Chamber for Service Industry (IPCSI) brought NRIs on a single platform to introduce them to investment opportunities.

The conference identified the areas of development in the area of infrastructure including roads, highways, rail, airports, power generation, SEZs, retail, real estate, housing, aviation, hospitality, travel and tourism, healthcare, schools, colleges, media-entertainment and other sectors of the service industry in north India, especially in the states of Punjab, Haryana, Himachal Pradesh and the union territory of Chandigarh.

The event took place under the banner Parvasi Punjabi Divas, which is in its fourth edition. It addressed the cause titled 'Global Investors Conference for Infrastructure Development'. The event took place in the city on January 11, 2007 registering fair governmental participation from the northern states, real estate companies and NRI investors.

He has already set up a Special Cell for the welfare of NRIs in the Chief Minister Office and a separate department for the welfare of NRIs had also been set up under the supervision of a Financial Commissioner level officer.

NRIs cheated back home or involved in a dispute over NRI property or even marriage, are just a phone call or an e-mail away from relief. All they have to do is to contact the NRI cell of the Punjab Police. Lodging a complaint is a simple process. Recently, the Cell also started a NRI Radio helpline to handle grievances of Canada-based NRIs. Located in Chandigarh, the Cell works round the clock to register NRI grievances.

NRIs' relatives too can approach the Cell. Since its formation in February 2004, the Cell has handled 932 complaints, out of which 771 have been disposed off satisfactorily, 161 cases are still being looked into.

The state is also grappling with a spate in crime. The crime rate has increased by about 20 per cent in the state, according to top police sources. Murder cases, for example, increased to 852 in 2006 against 743 in 2005. Similarly, 386 cases of rape were registered last year as compared to 366 in 2005, while the kidnapping cases increased to 654 in 2006 from the previous year's figure of 514. There has been a hike in burglaries and thefts which rose up to 5,670 as compared to 4,853 in 2005. This would surely be an area of concern for NRIs.

And, they seem to have taken note of the role they think they could play in making their home state a safer as well as a more attractive place to put money in. That's probably why there was such great interest shown by NRIs in Punjab's state elections this time.
Earlier this month, a media report said: "It is raining NRIs in Punjab. With India clocking an impressive growth rate and making waves the world over, an estimated 50,000 NRIs are in the state to throw their weight behind the candidates."

Whether or not that enthusiastic response had any effect on the outcome, observers feel the community wants a stake in the prosperity wave and the easiest way to do it is to tap those who will rule the state for the next five years.

Best returns for NRI investors in 2007

In 2007, where can NRIs get the best returns for their investments in stocks? The quick answer is, in the BRIC (Brazil, Russia, India and China) countries - away from the traditional markets of the US, Britain, Japan and Europe that offer more security but lower returns.

Since money flows instantly to obtain the best returns, the entire telecom-linked globe is one investment market today. So bankers and financial advisors keep tracking every economy for best investment returns. Some developing economies such as Hong Kong, Singapore and Mexico also offer healthy returns. In this scenario, 25 million NRIs living in over 110 countries have to be alert where their funds can get the top returns.

"Another major factor for NRIs is the exchange rate," said Sanjay Durgan, a certified financial planner and CEO of AbunDanze. "NRIs have to take (note of) the exchange rates of the country from where they are investing and the country in which they are investing. The gains from the stocks can be increased or wiped out by currency movements.

"Finally, does the NRI investor have the time to research the markets and the stocks he should be investing in?" asks Durgan, who specialises in mutual fund investments for NRIs. "It takes training, time and patience to research the market and NRIs are very busy people and cannot devote this much time daily. So a practical solution is not to take 'the direct route' by investing in stocks but 'the indirect route' and go for mutual funds where professionals manage your investment."

Then the million-dollar question: where to invest? Why not the other BRIC countries?
"Of course yes, if there is a fund giving access to these markets. The Indian story is a familiar story, something the NRIs can relate to. Today, NRIs are proud of India and want to be a part of this success story."And NRIs want to invest in this growth and cannot be left out of this exciting action and also reap good returns in 2007.

Source: hindustantimes.com/

Investments by Non-residents in General Purchase of Shares and Securities by Non-residents

Introduction

10.1 (i) Foreign investment in India is subject to policy guidelines framed by the Government of India from time to time in accordance with its Industrial Policy. In terms of the Industrial Policy announced by the Government of India on 24th July 1991 followed by subsequent guidelines issued by them, foreign equity up to 50%/51%/74%, as the case may be, is permitted by Reserve Bank under the Automatic Route in specified industries/services sector.

Applications, which do not conform to the parameters of the Automatic Route, are required to be made to the Secretariat for Industrial Assistance (SIA), Ministry of Industry, Government of India, and New Delhi.

Foreign Institutional Investors are permitted to invest in all securities in primary and secondary markets in India as per guidelines issued by Ministry of Finance, Government of India, New Delhi.

(ii) A wide range of facilities for making investments in India in shares and securities,
Bank deposits, company deposits, etc. is available to individuals of Indian nationality or origin resident outside India (NRIs) and overseas corporate bodies predominantly owned by such persons (OCBs). They are subject to different rules and investments both with repatriation and non-repatriation benefits are permitted under various schemes.

(iii) Foreign investment in India is also subject to regulation through the various provisions of FERA 1973. However, Government under approves once foreign investment its foreign investment and industrial policy, requisite approvals under FERA 1973 are granted by Reserve Bank in pursuance of the Government approval/guidelines.

While the relative provisions of FERA 1973 have been explained in Part 'A', detailed regulations governing investments and certain ancillary matters such as remittance of dividend, royalty and technical know-how fee, sale/transfer of shares, repatriation of capital, etc. are given in Part 'B'.

The various schemes for investment by NRIs/OCBs and other matters relating to loans, overdrafts and guarantees to non-residents have been explained in Parts 'C' and 'D' respectively.

Source:http://www.hindustantimes.com/

A New Overseas Indians Investments Policy

Government of India has released a new Investment Policy as on Thursday, November 30, 2006 Apparent in its site http://pib.nic.in

[Via - Press Information Bureau (Ministry of Overseas Indian Affairs, Government of India)]

Government has put in place a liberal and transparent policy for investment from overseas Indians. Most of the sectors are open to Foreign Direct Investment (FDI) under the automatic route.

Non-Resident Indians (NRIs) can invest upto 100% under the automatic route in the Housing and Real Estate Development for the following activities.

• Developments of services plots and constructions of built up residential premises;
• Investment in real estate governing construction of residential and commercial premises including business centers and offices;
• Development of townships;
• City and regional level urban infrastructure facilities, including roads and bridges;
• Investment in participatory ventures in the above activities;
• Investment in housing finance institutions.

NRIs can invest upto 100% in Indian companies engaged in Air Taxi operation. (For foreign companies Foreign Direct Investment (FDI) is permitted only up to 49%)

More Information Here- http://pib.nic.in/release/release.asp?relid=22589

NRIs: Buying a home in India made easy

In recent years, India has been witnessing unprecedented growth in the real estate sector fueled by the increased business activity.

Real estate development in India is estimated at $12 billion and growing at 30% every year. Though all segments of real estate business such as corporate, retail and residential have been driving this growth, NRI investment in residential property itself constitutes 80% of this sector.

Non-Resident Indians (NRIs) are one of the key contributors to the growth of the real estate industry and considering the immense potential in India, they are likely to step-up the investment in future.

In this article, senior tax professionals with Ernst & Young -- Gaurav Taneja and Rajesh S -- provide an overview of the key exchange control and tax implications that should be considered by NRIs while investing in house property in India.
Exchange control