India versus global: A balanced approach for NRI investors

His Indian portfolio was equally scattered, featuring 25-30 mutual fund schemes and random stocks chosen based on tips from friends and online forums. Despite his proactive approach, Rohan’s investments lacked direction and alignment with his financial goals. 

His story highlights a common challenge faced by NRIs: balancing investments between India and global markets effectively.

When we analyzed Rohan’s portfolio, it became evident that his strategy was reactive rather than goal-oriented. He was overexposed to high-risk assets, underinsured, and lacked contingency planning. importantly, his investments didn’t align with his aspirations, such as funding his children’s education abroad, creating a retirement corpus, or establishing an emergency fund. 

This imbalance was compounded by uncertainty about where his children might study or where he might retire, making it difficult to decide how much to allocate between Indian and global investments. Additionally, concerns about the rupee’s depreciation (approximately 3% annually in recent years) further complicated his decision-making process.

Rohan’s experience reflects a broader trend among NRIs. Many pursue investments driven by hearsay, FOMO (fear of missing out), and quick returns, neglecting safety, stability, and alignment with their goals. Over-diversification within India, overlapping mutual fund schemes, and random stock picks dilute potential returns and create fragmented portfolios. So, how can NRIs strike the right balance between Indian and global investments while addressing currency risks, taxation, and long-term financial goals?

Decision framework

To create a cohesive and effective investment strategy, NRIs should classify their goals into three categories:

Safety: Protecting wealth through low-risk instruments and insurance. This includes emergency funds and investments that provide capital preservation.

Stability: Building a solid foundation for predictable growth. This category includes diversified mutual funds, global ETFs, and balanced portfolios.

Aspirations: Achieving long-term objectives such as funding education abroad, retirement, or philanthropic endeavours. These investments can include growth-oriented equities, thematic funds, and alternative investments.

Aligning investments with these goals ensures a balanced portfolio that accounts for both opportunities and risks. NRIs should consider the following factors while allocating assets:

Currency risks: Investing globally hedges against rupee depreciation but introduces exposure to foreign exchange fluctuations. NRIs must assess their currency risk tolerance.

Taxation: Indian investments may involve capital gains tax and compliance obligations, while global investments could offer tax advantages depending on the jurisdiction.

Market growth: Emerging markets like India offer high growth potential but come with volatility. Developed markets provide stability but may have slower growth.

India versus global

NRIs often struggle to allocate investments between Indian and global markets. While India’s robust economic trajectory and growth sectors like infrastructure, consumption, and technology are attractive, high valuations make staggered investing essential.

When deciding between India and global markets, financial goals should take precedence. For instance, NRIs planning their children’s education abroad might prioritize investments in stable global markets to hedge against currency fluctuations. Conversely, those building a retirement corpus in India might allocate more to domestic funds aligned with long-term growth themes.

GIFT City

GIFT City, which hosts India’s International Financial Services Centre (IFSC), simplifies investment for NRIs while optimizing returns. With a unified regulatory framework under the International Financial Services Centres Authority (IFSCA), GIFT City eliminates many complexities associated with cross-border investments. Key benefits include:

Tax-efficiency: When structured correctly, investments through GIFT City can offer capital gains tax exemptions, especially feeder funds tied to mutual fund schemes in India.

Simplified compliance: NRIs without other income in India do not require a PAN or need to file tax returns for investment-specific income.

Global currency transactions: Investments can be made in US dollars or other global currencies, eliminating the need for local bank or demat accounts.

Top global investment trends for NRIs in 2025

As NRIs navigate evolving markets, understanding emerging trends can guide their investment strategy:

Valuations and margins of safety: While the US and Indian markets have delivered impressive returns, their high valuations warrant caution. India’s capital markets are experiencing a deceleration after a period of robust growth. 

In 2024, benchmark indices like the Nifty 50 and the Sensex recorded annual gains of approximately 8.8% and 8.2%, respectively, marking their ninth consecutive year of growth. However, these figures lag behind global counterparts, attributed to factors such as sluggish corporate earnings and substantial foreign fund outflows. 

On the other hand, global markets, including China and Korea, currently offer opportunities at relatively low valuations, presenting a margin of safety for long-term investors. However, investing in some of these markets sometimes involves more than just attractive valuations; factors such as geopolitical risks, regulatory unpredictability, and economic growth stability need to be considered carefully.

Thematic investments: Themes like artificial intelligence (AI), cloud computing, and environmental, social and governance (ESG) will continue to gain traction but come with volatility. NRIs should treat these as satellite portions of their portfolio with a long-term outlook.

Conclusion

For NRIs, the key to successful investing lies in a structured approach rather than chasing market trends. Prioritizing asset allocation and aligning investments with life goals ensures financial security and growth. Leveraging platforms like GIFT City can simplify compliance and enhance returns while a balanced allocation between Indian and global markets mitigates risks and maximizes opportunities. This framework allows NRIs to create cohesive portfolios that address uncertainties and achieve long-term aspirations.

Views are personal. Tarun Birani is the founder and chief executive at TBNG Capital Advisors.