This document provides an overview of investment options for NRIs from the USA and Canada wanting to invest in Indian equities. It discusses that NRIs can invest in mutual funds and direct equities through certain fund houses and the Portfolio Investment Scheme respectively, but there are some limitations and regulations like FATCA. Portfolio management services are also an option for NRIs to invest in direct equities. The document outlines various fees and Indian tax liabilities associated with different investment avenues. It also describes the services provided by De Emerald such as account setup assistance, tax filing and coordination with service providers.

1. De Emerald Partners
Private & Confidential
NRI Investing in India
Private & Confidential

2. De Emerald Partners Private & Confidential
Executive Summary
¨ Overseas Citizens of India (OCI) and Persons of Indian Origin (PIO) are treated on par with Non
Resident Indian (NRIs) in all transactions barring the purchase of agricultural or plantation property.
¨ This means an OCI and PIO can invest in Bank deposits, Indian mutual funds, real estate, gold,
portfolio management services and direct equities
¨ For NRIs (excluding from USA & Canada) investing in Indian MFs’ is as simple as it is for the Indian
investors. They just need to comply with the norms set by the country they are based in
¨ NRIs are allowed to invest in mutual funds in India on a repatriable or non-repatriable basis subject
to regulations prescribed under the Foreign Exchange Management Act (FEMA)
¨ For NRIs in USA & Canada investing in Mutual Funds has limitations
¨ NRIs can invest in Indian stock markets under the Portfolio Investment Scheme (PIS) of the Reserve
Bank of India (RBI). Under this scheme, an NRI has to open an NRE/NRO account with an RBI-
authorised Indian bank.
¨ An individual can open only one PIS account for buying and selling stocks. NRIs are not allowed
to do intraday trading or Short selling in India.
¨ NRIs can only trade on delivery basis. NRIs need to own the stocks before they sell
¨ All investments shall carry the right of repatriation of capital invested and capital appreciation so
long as the investor continues to be a resident outside India
¨ This document focuses the options for NRIs from USA & Canada desiring to invest in Indian Equities.
Investing in India's long-term success story is an easily available option to NRIs . All an
NRI needs is a bank account and other documents which even a resident investor will
require to submit.

3. De Emerald Partners Private & Confidential
Investment Options for NRIs
§ Bank Fixed Deposits
§ Real Estate
§ Mutual Fund
§ Direct Equity
§ Investments in Bonds/Government Securities
§ Certificate of Deposits
§ National Pension Scheme
This document focuses on investments in Mutual Funds and Direct Equity

4. De Emerald Partners Private & Confidential
Mutual Fund Investments
¨ Most US-registered mutual fund companies which have India operations do not accept
investments from Indians living in the US as they are bound by the cap on the number of
non-resident investors they can take
¨ MF companies taking investments from NRIs from USA & Canada are subject to the
regulatory constraints - SEC, Foreign Account Tax Compliance Act (FATCA) regulations
¨ FATCA makes it compulsory for all financial institutions in the world to report
comprehensive details of all transactions involving US/Canada residents, (including non-
resident Indians) to the US & Canada Government
¨ Regulators require fund managers to be registered with them if they are handling more
than a certain number of accounts of their residents. i.e. the Dodd-Frank Act of the US
requires fund managers handling over 15 US-based investors to be registered with the
US regulators and follow their rules
¨ Most US-registered mutual fund companies which have India operations do not accept
investments from Indians living in the US as they are bound by the cap on the number of
non-resident investors they can take
¨ To avoid dual regulators and multiple compliance regulations , many fund houses have
stopped taking investors from these countries

5. De Emerald Partners Private & Confidential
Mutual Funds Investments
The following fund houses in India are
accepting investments from NRIs
based in US and Canada :
§ Birla Sun Life Mutual Fund
§ SBI Mutual Fund
§ UTI Mutual Fund
§ ICICI Prudential Mutual Fund
§ DHFL Pramerica Mutual Fund
§ L&T Mutual Fund
§ PPFAS Mutual Fund
§ Sundaram Mutual Fund
Each of these fund houses may have a
different condition or an additional
requirement that may imposed
§ Some fund houses accept only paper
application investments with declaration
signed by investor – ICCI, Birla, SBI
§ Almost all the fund houses require an
additional document, such as a
declaration, signed by the investor.
§ Accepts investment only when the
investor is physically present in India
§ Allows investment only in close-ended
funds - L&T
Given the facts, investments in MFs by NRIs of USA & Canada is a bit
onerous and has limitations

6. De Emerald Partners Private & Confidential
Direct Equities Investment
§ NRIs can invest in Indian stock markets under the Portfolio Investment Scheme (PIS)
of the Reserve Bank of India (RBI)
§ PIS—a scheme of Reserve Bank of India—enables NRIs and OCBs to purchase and sell
shares and convertible debentures of Indian companies on a recognized stock
exchange by routing such purchase/sale transactions through their NRI Savings
Account with a designated bank branch
§ Aggregate investment by NRIs/PIOs cannot exceed 10% of the paid-up capital in an
Indian company and a PIS account helps the RBI ensure that the NRI holding in an
Indian company does not cross that limit
§ Each transaction through a PIS account is reported to the RBI
§ Shares issued through initial public offerings (IPOs) are not covered under the PIS. It
is the responsibility of the issuing company to inform the RBI the number of shares it
is allotting to NRIs
Investing through the PIS route, though involves a bit of one-time documentation, it is
relatively an easier process.

7. De Emerald Partners Private & Confidential
Portfolio Management Services
• Portfolio Management Scheme popularly known as PMS are specialized investment
vehicle for lump sum investments. The portfolio manager invests the money in
shares and other securities and manages the portfolio on behalf of the client
• One can invest fresh money in PMS and the portfolio manager will construct a
portfolio by deploying that money
• Alternatively one can transfer his/her existing shares portfolio to the Portfolio
Management Scheme. The portfolio manager will revamp the portfolio in sync with
his investment philosophy and strategy
• Once the Portfolio Management Scheme account is opened, the portfolio manager
takes investment decisions and has full discretionary power to manage investor’s
portfolio, i.e. he can buy/sell stocks without consulting with the investor
• The client can look at where the portfolio manager is investing client’s money. Also
one will be able to generate reports like Investment Summary, Portfolio Transaction
List, Performance Analysis, Portfolio Statement and Quarterly capital gain report.
Investing in Direct Equities thru the PMS route is a good option for NRIs
from US and Canada

8. De Emerald Partners Private & Confidential
Illustrative PMS Fees
Fees Option A Option B Option C
Fixed Management
Fee
1.50% p.a.
Charged quarterly
@0.375% on average
NAV
2.00% p.a.
Charged quarterly
@0.500% on average
NAV
3.00% p.a.
Charged quarterly
@0.750% on average
NAV
Profit Sharing Plus 15% on profit
generated p.a. above
Hurdle rate
Plus 10% of profit
generated p.a. above
Hurdle rate
No profit sharing – but
there could be a lock-
in of minimum 3 years
In addition to the above, there will be additional charges to cover costs i.e. Custodian
fees, Fund accounting, R&T Fees, Depository charges, Franking, Notarization,
Brokerage, Taxes not limited to GST, Securities Transaction Tax and other Statutory
levies, Audit fees and legal fees which would be charged from the Client Account ,
based on actual expenses incurred. Approximately all these costs can be estimated at
about 1% of the portfolio.
• Minimum Investment – INR 50.00 Lakhs

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Indian Income Tax Liability
Income Tax Equity Funds/Stocks Debt Funds
Short-term Capital Gains Tax 15% As per tax slab
Long-term Capital Gains Tax 10% over Capital gains
of INR 100,000
• 10% without indexation,
• 20% with indexation
Dividend Distribution Tax 10% • 25% on liquid funds
• 12.5% on other debt
funds

10. De Emerald Partners Private & Confidential
De Emerald Services
ü De Emerald Service includes the following
§ Ownership and Coordination with all Service providers for setting up and
opening account – i.e PMS providers, Banks, Custodians, Broking houses
§ Preparing net-worth of the client - To understand the current Assets ownership
and Liabilities and to decide on the future asset allocations
§ Goal-based investment approach - Different goals would have different time
horizons and hence impact the asset allocation
§ Risk-profiling to devise proper asset allocation strategy
§ Annual Income-tax filing with Indian Tax Authorities
§ Providing Indian Income tax details and Coordinating with the US Tax Consultants
ü Follow-on regular filing of Indian Income Tax returns

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