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The economic contribution, cultural influence and ability to bridge India with the global community make NRIs indispensable to India's growth story. In 2024, India received the largest remittance at USD 129 billion followed by Mexico and China with the remittances at USD 68 billion and USD 48 billion.
At the Cafemutual India Investment Summit in Dubai, Krishnan Ramachandran, CEO, Barjeel Geojit Financial Services, Pratibha Suryanarayana, Head - Managed Investments & Advisory, Standard Chartered Bank UAE and Sonali Rawal Nambiar, Executive Director & Head – NRI Business, Anand Rathi UAE, spoke at a panel discussion on ‘Segmentation of the NRI market’. The session was moderated by Prem Khatri, Founder & CEO, Cafemutual.
The panel talked about the emerging and existing trends in NRI markets. Here are the key takeaways from the discussion:
- 55% of the NRIs live in Gulf Cooperation Council (GCC) with most of them living in UAE making up one third of the total population
- The economic classification among these NRIs varies from daily wage workers to ultra HNIs covering the entire spectrum
- The NRIs include the individuals who are living outside India for previous two or three generations as well as those who have just moved out of India
- The financial needs of these NRIs also vary as per their economic status. The recently moved individuals or families need multi-country banking solutions while the entrepreneurial individuals and families have different needs
- Mass affluent section of the NRIs is growing rapidly across the regions and the base salary difference between their jobs and their counterparts in India leaves them with enough wealth to invest
Investment choices of NRIs
- HNIs and UHNIs majorly focus on wealth preservation and global diversification
- Currently, the exposure to India is not so substantial. However, NRIs are now actively considering India as an investment destination
- The recently moved individuals and families have more rooted connection with India and they are also not exposed to global investment opportunities
Demand of product type by NRIs
- The lower income segment among the NRIs prefer to invest in gold-based investment instruments as it is easily accessible
- The middle segment focuses their investments to achieve dear to life objectives including the educational expenses of their kids, building a home and retirement.
- HNIs and UHNIs are well catered in terms of product availability and banks
- The HNIs and UHNI NRI investors need holistic wealth management solution that include wealth creation, wealth preservation, tax planning and multi-country migration of assets and money
- The objective led wealth management approach is the need of the hour for HNI and UHNI NRIs
Awareness among them
- The HNI and UHNI NRI investors have time and resources at their hands which has led to an increased financial awareness among them
- Second and third generation wealthy investors are looking to explore new financial options
- They want to do more creative things and have a willingness to go with more risk adjusted returns as they want more from the markets
Trends in investment patterns
- The ideal split of the investment portfolio between Indian and global investment depends on the risk appetite of the individual of the family
- The middle segment of the NRI investors is more India-focused with 60% to 80% of the investment going to India related investments while the global portion of the investment ranging between 30% to 40%
- The mass affluent NRIs have India related investments at around 40% to 50%
- The investment decisions also depend on the location or the set-up of the business. If the business is based out of India, then the weightage of India in the portfolio becomes aggressive up to 60% to 70% of the investment portfolio.
- And if the business is based out of India, then the investment can be as low as 10% of the portfolio
The speakers concluded by claiming that several NRIs have started focusing on India. This is because India has been the best performer in providing returns over the last 10-15 years. Currently, the risk adjusted returns that India can provide cannot be achieved anywhere else across the world.
There was a declining trend in the investments towards India in the recent years. However, the macroeconomic indicators, demographic dividend, skilled labor force and the government policies will contribute in further making India one of the best and safest investment options for the global community and NRIs can play an important role in fulfilling that dream.