NRI Talk: Why NRIs are exploring Vietnam, Indonesia, and Africa for tactical growth, Sreepriya NS decodes

Economic Times

20-05-2025

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In a world where geopolitical shifts and economic realignments are rewriting investment playbooks, Non-Resident Indians ( NRIs ) are no longer limiting their portfolios to traditional hotspots like India, the US, or the UK. A new trend is quietly gaining momentum — one that points to emerging markets such as Vietnam, Indonesia, select African nations, and parts of Eastern Europe.In this edition of NRI Talk, we speak with Sreepriya NS, Co-founder and Director of Entrust Family Office, to understand why globally savvy NRIs are increasingly eyeing these frontier economies for tactical growth From favourable demographics and improving infrastructure to strategic diversification and early-stage investment opportunities , these regions are drawing attention for more than just their growth potential — they offer resilience, reach, and a new edge to global wealth strategies. Edited Excerpts –A) NRIs continue to view India as a compelling long-term investment destination, driven by its strong domestic consumption, demographic dividend, and a rapidly formalising economy.Many are drawn not just by the potential for financial returns, but by the emotional and strategic value of investing in their country of origin — whether that's through real estate, startups, listed equities, or legacy planning.Simultaneously, NRIs are increasingly diversifying their portfolios across geographies. Countries like Singapore, the UAE, the US, and the UK remain attractive due to their stable financial ecosystems, regulatory ease, and access to global investment opportunities.In particular, Singapore and Dubai are emerging as investment hubs due to their tax efficiency, business-friendly environments, and proximity to India.Additionally, many NRIs with family or business linkages abroad invest in local real estate and private funds, aligning these investments with their global lifestyle.There is also a growing trend of tactical investments in emerging markets such as Vietnam, Indonesia, select African nations, and parts of Eastern Europe, offering high-growth potential.This trend reflects a balanced strategy: India continues to represent 'roots and returns', while global markets provide 'reach and resilience'.Key Statistics (as of Dec 2024):• Mutual Fund Investments by NRIs: Approx. USD 18–20 billion (~INR 1.6 lakh crore)• NRI Bank Deposits: Approx. USD 162 billion (~INR 13.7 lakh crore) across FCNR, NRE, and NRO accountsA) In case of Mutual funds, (which as per SEBI regulation, are established as a trust) the gains from sale of a unit cannot be treated the same as gains from sale of share of a company.Hence under the Article 13 (5) of the DTAA with the above countries, the gains are taxable only in the country of residence of NRIs of such countries, and not in India.A) While specific data on NRI investments into REITs and fractional ownership models in India remains limited, the broader trend in real estate investment is significant.NRIs invested approximately USD 3.1 billion (INR 26,000 crore) in Indian real estate during the first half of 2024, following a total investment of around USD 13 billion in 2023.The growing interest in REITs and fractional ownership platforms reflects a shift toward more structured, accessible, and diversified real estate investment opportunities.These models offer NRIs the advantage of transparency, liquidity, and lower ticket sizes — making real estate participation more feasible without the operational complexities of direct ownership.While not a one-size-fits-all approach, REITs and fractional investments are increasingly seen as efficient, regulated, and scalable avenues for NRIs to participate in India's real estate growth story.Many NRIs continue to hold significant real estate assets in India, despite having settled abroad for decades.At Entrust, we've supported families like one from Hyderabad, now in the U.S. for over 35 years, with managing their residential and commercial properties.The real challenge often lies with the next generation, who face the burden of inheritance, tenant management, and compliance from afar.As a bespoke family office, we help simplify this complexity—offering peace of mind and practical solutions so they can focus on their lives overseas.A) One of the biggest mistakes NRIs often make when investing in India is approaching it with the same mindset or assumptions they use in their resident countries. India is a dynamic, high-growth market — but it also comes with its own set of regulatory, taxation, and liquidity nuances.The foremost important thing to consider while investing in India is to have clarity about the purpose of such investments. This determines further requirements - such as cash flows, inheritance/estate planning, repatriation etc. from such investments.It also simplifies the asset allocation decision and the selection of products/vehicles. In the absence of such clarity, one gets caught in the 'latest' trend of investment products, or the preferred options of the dealer/distributor.A few common pitfalls to avoid:1. Lack of Clarity on Objectives2. Overexposure to Real Estate3. Ignoring Tax Implications4. Using Informal Channels(Investing through family or friends without a proper legal or advisory framework can result in misaligned decisions and, in some cases, loss of control or transparency)5. One-Size-Fits-All Approach: Assuming what works for resident Indians will work for NRIs can be misleading. NRIs have access to different investment opportunities and risks, and need tailored strategies that factor in currency exposure, repatriation rules, and global asset allocation.The key is to approach India with professional guidance, clear intent, and a balanced view — combining emotional connection with financial discipline.A) There is no single, uniform money mindset that defines all NRIs. Their investment approach and financial behaviour vary significantly based on their stage of life, their country of residence, their financial goals, and evolving personal circumstances.However, some common attributes do emerge. Many NRIs display a strong preference for financial prudence, long-term wealth creation, and portfolio diversification across geographies.Their strategies often reflect a balance between emotional ties to India and practical considerations driven by global exposure and opportunities.Depending on their objectives—whether it's retirement planning, wealth preservation, or legacy creation—their mindset evolves in alignment with their individual context and the macroeconomic environment.In essence, while there is no monolithic mindset, there is a consistent focus on strategic, informed, and goal-oriented financial planning.A) Rather than identifying 'favorite' asset classes in a broad sense, our approach is rooted in understanding the unique needs, objectives, and risk profiles of each NRI family. Investment decisions are highly individualised and based on their life stage, financial goals, and geographic exposure.That said, most NRI portfolios typically comprise a diversified mix of asset classes — including listed equities, debt instruments, mutual funds, real estate, REITs, and alternative investment avenues such as private equity or structured products. This diversification helps balance growth, income, and capital preservation objectives.Ultimately, we don't prescribe investments based on popularity, but offer solutions tailored to each client's financial strategy and long-term vision.A) NRIs typically do not exhibit a strong bias toward any single sector. Instead, they prefer a diversified allocation across the broader Indian market.This approach not only aligns with prudent investment principles but also reflects confidence in India's multi-sectoral growth story.India's attractiveness as an investment destination lies in its robust and resilient economy, offering opportunities across sectors such as financial services, technology, healthcare, manufacturing, infrastructure, and consumer goods.Rather than chasing sector-specific trends, most NRIs seek balanced exposure that captures the overall growth momentum of the country while managing risk effectively.NRI investors are typically sector-agnostic but prioritize market-driven strategies with a strong focus on liquidity and repatriation.At Entrust, we've curated bespoke strategies for NRI clients — one of which is a dividend-yield portfolio we've used over the last five years.It's equity-oriented with a defensive tilt, focused on high quality dividend paying companies to ensure stable returns.Notably, dividends are 100% repatriable under RBI norms, making this an effective income-generating and risk-mitigating strategy in today's volatile environment.A) Luxury collectibles such as art, vintage cars, and high-end watches often form a part of an NRI's lifestyle and legacy portfolio, but preferences in this space are highly personal.These choices are typically driven by individual taste, passion, and in many cases, a desire to preserve heritage or express identity.For some, interests in art, music, or cultural artifacts are closely tied to philanthropic values or legacy planning — supporting causes, institutions, or cultural preservation initiatives. Rather than being driven purely by investment returns, these assets often reflect emotional and aesthetic considerations, making them deeply unique to each family.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)