Strong economic fundamentals, proactive handling of the pandemic by the government and a young population make India a ripe destination for mature investments in a variety of sectors. Here is how NRIs can take advantage of it.
It's wise to be fearful when others are greedy and greedy when others are fearful. That statement sums up investment legend Warren Buffet's contrarian view on stock markets - but it's also equally effective for the Non-Resident Indian diaspora looking for attractive investment opportunities in India amid the Covid-19 pandemonium.
The economic impact of coronavirus has been devastating, but it has also dramatically changed the outlook for several industries. It has emptied offices and shuttered shops - but filled warehouses and highlighted demand for work-from-home spaces.
In India, movement restrictions to contain Covid-19 have led to unprecedented changes in the way millions of people live and work, with online shopping sales soaring. According to industrial property firm ProLogis, the demand for logistics real estate worldwide could grow by 150-200 million square feet annually per country for the next two to three years, prompting some bold investors to not only stick with their property asset class but also raise their stakes. According to legendary investor and fund manager, James Richman, while governments around the world are scrambling to stimulate their economic machinery, India is among the handful of countries that are poised to bounce back with a bang. If that sounds more contrarian than Buffet, Richman says that strong economic fundamentals, steady increase in GDP since the turn of the century and a robust and young population make India a ripe destination for mature investments in a variety of sectors.
Historically, the major demand driver for NRIs investing in India was real estate - either as avenues of pure profit/income or to plan for their eventual return to India. The ongoing exodus of millions of expats back to India has thrown this driver into sharper relief, coupled with a work-from-home regime that's likely to last beyond the pandemic and the realisation that in a world of professional uncertainty, house rent is pure expense with no long-term value. In this uncertain economic climate, what are the ways in which the Indian diaspora can leverage their non-resident status and make the most out of their potential investments in India Here are some key sectors and investment avenues to consider:
While gold is like an insurance cover for your portfolio and often tends to do well in times of trouble, it's also important to remember that gold and silver have historically offered only capital protection after adjusting for inflation and as such do not qualify as an appreciating asset. But of course, you never lose with gold - especially if you consider investing between 10-15 per cent of your overall portfolio holding. NRIs who do not have any existing investment in the precious metal should consider adding gold to the investment portfolio whenever gold prices fall. Further, instead of investing in physical gold, it's always better to buy through Gold exchange-traded funds (ETFs) with a good trade volume. If you have family members in India, you should also consider investing in Sovereign Gold Bonds through them - since NRIs are not allowed to directly invest in Indian Sovereign Gold Bonds as per current regulations.