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  • India's Exploding Real Estate Market: Shades of the Florida Condo Bubble [View article]
    Anshu, To clarify, there is no Indian law restricting NRIs in the USA investing in equities directly - for example, Citibank's website offers to open brokerage accounts with Citicorp Investment services. See www.online.citibank.co...

    The problem arises when investing through mutual funds based in India -- PFIC becomes an issue for US based residents . See www.altassets.com/case...

    You can however invest in Indian equities directly - for this brokerages in India do not provide an online method, you will have to do it via phone or email only. You will still have to obtain the RBI's permission (PIS scheme or PMS scheme), set up demat accounts, identify the bank branch and bank account through which you will fund the broking account, make arrangements with your broker to report your transactions to the RBI. Its all a big hassle. I am investing in Indian equities directly from the USA through HDFC / Navia Markets for the last 2 years.

    Please investigate your tax situation and the types of accounts you would like to use - NRE / NRO etc. You can also find lots of useful information on this subject at www.r2iclubforums.com/.../

    RE: The Real Estate prices that you spoke about in your article, I agree with you that there is a bubble. But there is also accelerating demand - due to migration to cities, due to increasing salaries, due to SEZs and Real Estate companies buying up HUGE land banks, & amazing amounts of foreign direct investment in real estate in India (currently FDI in real estate is automatic, no prior RBI / FIPB permission is needed, so companies abroad can and do waltz in with their bubble money and buy up huge amounts of land). So while there is basis for increasing prices, prices as they currently exist are probably bubble like and like every bubble will burst sometime in future.

    Opinions expressed here are my personal opinion and do NOT reflect opinions of my employer or any other organization. They are NOT legal opinion, please consult your legal advisor before taking any action based on opinions mentioned here.
    Feb 8 07:23 PM | Likes Like |Link to Comment
  • India's Exploding Real Estate Market: Shades of the Florida Condo Bubble [View article]
    Your statement - "India does not allow direct investment in equity markets for non-resident Indian citizens (and definitely not not foreigners). " is factually incorrect. I know because I am NRI and I invest directly, legally.
    There are several web based brokers that support direct investments from NRI's especially from the Middle East region. Share Khan, India Bulls, Navia Markets all have NRI oriented support help sites on how to invest. You will need permission from the RBI (valid for 5 years), under the PIS (Portfolio Investment Scheme). You need a valid PAN number to apply, the funds that you invest will have to go through an identified branch and an identified account (PIS account). The funds that you invest can only be on a delivery basis i.e. you will have to take delivery of the stock before you can sell it (No short sales). There are limits on each Industry / Company on how much of the total equity can be held by FIIs & NRIs, once this limit is reached, no further investments are allowed. Every transaction needs to be reported to the RBI.
    It is true that Foreign Individual investors are unable to invest directly in Indian stocks. However, Foreign Institutional Investors (FIIs) are allowed, after they obtain permission from the RBI and SEBI.
    India is a land in transition, there are extreme variations in incomes. Delhi has the highest per capita income in the nation. Prices are supported by demand. If there is no demand, prices will come down. You can see this in Bangalore - there are several apartment builders who are sitting on vacant apartments in areas such as Outer Ring Road, Sarjapura Road. Incomes are going up 15% a year, i.e. doubling every 6-7 years. I know of several people in the age group 21-30 earning more than 12 lacs per annum, who own houses they purchased at 50-60 lacs. This was unthinkable 10 years ago. So the number of people earning high salaries has gone up significantly. This has caused asset inflation in all categories and consumption. This is what is driving the Indian Growth story. When will this end ? Good question. The RBI has already taken steps to cool the real estate sector. Some of its effects are already felt in high growth regions. It is expected that prices will fall 10-15% in these areas in the next 2-3 years.
    Feb 8 01:08 PM | Likes Like |Link to Comment
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