22-07-2025
NRIs in UAE: How to invest in foreign currency non resident fixed deposits
Question: I have been a resident of the Gulf for the last 17 years after leaving India and have now acquired foreign citizenship. I have been investing in foreign currency non-resident deposits in India. Can I continue to do so after acquiring foreign citizenship? What are the advantages of such investment?
ANSWER: You will be eligible to invest in Foreign Currency Non-Resident deposits with banks in India even after you take up citizenship of a foreign country and cease to be an Indian citizen. You will be treated as a person of Indian origin since you held an Indian passport. The money will be retained in the same international currency, whether it is US Dollar, British Pound, Euro or any other specified foreign currencies. The interest will be paid to you in the same currency and the deposit will be refunded on maturity also in the same currency. Therefore, there is no risk of any exchange loss. The duration of the term deposits ranges from one year to five years. The interest earned on the deposits is fully exempt from tax in India.
A PIO/NRI has the option to deposit his funds in the Non-Resident (External) Account in which case the deposit is converted into rupees. This would fetch a higher rate of interest but the exchange risk will have to be borne by the depositor. During the financial year 2024-25, the net inflow of non-resident deposits was $16.2 billion which was the highest in eleven years. The share of FCNR deposits was 44 per cent. Therefore, this deposit has become extremely popular with non-resident Indians and persons of Indian origin.
Question: There are some reports that the corporate results of the first quarter of the current financial year 2025-26 are not as per market expectations. Is there likely to be an upswing in the manufacturing sector in the coming weeks?
ANSWER: During the first quarter, inflation in commodity prices had an adverse impact which resulted in urban consumers cutting back on discretionary spending. Unseasonal rains in certain parts of India also impacted food prices. However, recent data for June has indicated that the demand for consumer goods has picked up. This is partly attributable to income tax rates being lowered for the current financial year which has resulted in greater take home salaries for the middle class. Therefore, data for home, personal care and healthcare segments has indicated strong growth and this is reflected in the sales performance of almost every FMCG company.
In the coming weeks it is expected that the demand for consumer goods will spurt even more due to rural demand picking up on account of sustained growth in the agricultural sector. Other figures indicate that the construction equipment sales recorded a growth of 55 per cent in June, driven by the push for infrastructure projects. Automobile sales have increased by 5 per cent to over 2 million units. According to the Federation of Automobile Dealers, electric commercial vehicle sales went up by 31.7 per cent. Sale of electric commercial vehicles recorded an increase of 122.5 per cent year-on-year.
Question: As in many other countries, spurious pharmaceutical products are sold to unsuspecting patients. What action is the Indian Government taking to fight this menace?
ANSWER: The Union Health Ministry is in the process of amending the rules to make it mandatory for manufacturers of antimicrobials, vaccines and psychotropic substances to affix barcodes or Quick Response codes on their product labels. Earlier the drug regulator had mandated that certain cancer drugs would have barcodes for validating their authenticity. This was done to prevent criminals from refilling expensive anti-cancer drugs with counterfeits. These fake drugs were then mixed with genuine stocks and sold to unsuspecting cancer patients.
Under the new regulations, it is mandatory for pharma companies to affix barcodes on the top 300 brands which would give information such as manufacturing licence and batch number. These drugs include widely used analgesics, pain relievers, vitamin supplements, and blood sugar lowering medicines. Therefore, stringent steps are being taken by Government authorities in India to remove the scourge of fake medicinal products being sold in the market.
The writer is a practising lawyer, specialising in corporate and fiscal laws of India.
