How to Invest in India: The Complete Guide

How to Invest in India: Complete Guide

Perhaps no other country in Asia, or even the whole world, will have a greater impact on the 21st century than India will.

With a consistently high GDP growth rate exceeding 6% and a track record of avoiding recessions since the late 1970s, India’s economic stability is a key driver of its progress.

India recently officially overtook China to become the world’s most populous country. But unofficially, India’s population has been larger than its eastern neighbor for quite a while.

One of India’s biggest economic advantages is its large and skilled labor force, especially in English-speaking fields. This making it a highly attractive destination for outsourcing. 

Investing in India presents many opportunities for savvy investors. Although it’s not the easiest of Asian countries to invest in, the country still has its charm.

Our guide delves into the three main areas of investment in India: stocks, property, and starting a business.

The bad news is: all of these methods place limits on foreigners in one way or another. Yet there’s usually some workaround. We’ll discuss India’s foreign investment limits along with a few alternatives.

Trading Indian Stocks

Unlike some of its neighbors, India’s stock market isn’t wide open to foreign investors.

Non-Indians can’t set up a brokerage account or trade individual stocks in India directly, so you’ll have to be a little more creative and think outside the box if you wish to participate in the Indian economy via this route.

Several India ETFs are listed in the US and elsewhere. These hold Indian stocks, and as a foreign trader, is usually the easiest way to own stocks in India for most people. You’ll otherwise need to jump through some complicated hoops to trade stocks individually.

The largest India ETF is the iShares MSCI India ETF (BATS:INDA). Other options include Invesco India ETF (NYSEARCA:PIN) and Columbia India Consumer ETF (NYSEARCA: INCO)



A few of India’s largest stocks are listed on foreign exchanges. For example, Infosys (NYSE:INFY) is tradable on the NYSE, and so is HDFC Bank (NYSE:HDB), which is India’s largest financial institution.

Here are a few other methods for investing in Indian stocks:

  • Foreign Portfolio Investment (FPI): Non-Indians can invest in Indian stocks through the FPI route, which includes registered foreign institutional investors (FII) and foreign portfolio investors (FPI).
  • Qualified Foreign Investor (QFI): Under the QFI scheme introduced by SEBI, non-Indians who do not qualify as FPIs can invest in the Indian stock market. The scheme provides simplified registration and compliance procedures for eligible investors.
  • Depository Receipts: Non-Indians can invest indirectly in Indian stocks through depository receipts. Depository Receipts (DRs) are issued by foreign depositories against underlying Indian stocks.
  • Direct Investment: In certain cases, non-Indians can invest directly in Indian stocks through the Foreign Direct Investment (FDI) route. Direct investment in individual stocks is subject to sector-specific caps and regulations set by the government.

It’s important to note that investing in the Indian stock market as a non-Indian may have specific limitations, such as investment limits, compliance requirements, and taxation.

With such limitations in place, you might be inclined to write off India already. If that’s the case, take a look at other Asian countries which are more friendly to foreign investors.

If you’re still intent on investing in India, keep reading for a couple of other options.

Buying Property in India

First and foremost, it’s not possible to own freehold land as a foreigner in India. Property ownership is a right reserved for locals and Non-Resident Indians only.

This means investing in India by purchasing and owning property directly is off the table.

However, it’s possible for foreigners to invest in India’s property market by buying a REIT listed on a public exchange. Larger investors have access to several other methods, such as entering into a joint venture.

The guidelines for foreign investment in Indian real estate are primarily governed by the Foreign Exchange Management Act (FEMA) and regulations issued by the Reserve Bank of India (RBI).

Here are the main routes available for foreigners to invest in Indian real estate:


  • Real Estate Investment Trusts (REITs): Foreigners can buy Indian real estate indirectly through Real Estate Investment Trusts, which pool funds to invest in income-generating real estate assets. The most notable REIT is the CapitaLand India Trust (SGX:CY6U), which is listed on the Singapore Stock Exchange and owns commercial property in India.
  • Non-Resident Indians (NRIs): If you count yourself among the 32 million NRIs residing outside of India, you have fewer restrictions when investing in real estate in India. NRIs can purchase residential and commercial properties in India without any specific approval, and can also acquire agricultural land.
  • Foreign Direct Investment (FDI): Foreigners can invest in Indian real estate through the FDI route. The FDI policy allows for 100% foreign investment in specific real estate sectors, such as townships, housing, commercial, and infrastructure development projects, subject to certain conditions and sector-specific guidelines.
  • Joint Ventures: Large foreign investors can enter into joint ventures with an Indian partner to invest in real estate projects in India. Joint ventures allow for collaboration with Indian entities or developers and can be structured in various ways.
CapitalLand India Trust

Foreigners can’t directly buy real estate in India. With that said, you still have options. The CapitaLand India Trust, listed in Singapore, owns buildings in Pune, Bangalore, and elsewhere.

Starting a Business in India

Because of recent reforms and initiatives introduced by the government to bring offshore capital into the country, it’s now possible to start a business in India as a foreigner.

Here’s an overview of the process and requirements for foreigners to establish a business in India:

  • Legal Structure: Foreigners can choose from various legal structures to set up a business in India, such as a private limited company, limited liability partnership (LLP), branch office, liaison office, or project office. The choice of structure depends on factors like the nature of the business, investment size, and long-term objectives.
  • Foreign Direct Investment (FDI) Policy: Foreign investment in India is regulated by the FDI policy issued by the Department for Promotion of Industry and Internal Trade (DPIIT) and the RBI. The FDI policy specifies the sectors where foreign investment is permitted, the applicable sectoral caps, and any conditions or approvals required.
  • Company Registration: The process of registering a company in India involves several steps, notably, drafting the Memorandum and Articles of Association, then filing it and all other incorporation documents with the Registrar of Companies.
  • Compliance and Approvals: Foreign companies must comply with various statutory and regulatory requirements, such as tax registration and complying with labor laws.
  • Sector-Specific Approvals: In certain sectors, such as defense, telecom, etc., additional approvals or licenses may be needed from regulators or government authorities.

As you can see, while it is possible to establish a business in India as a foreigner, it’s not exactly straightforward.

For what it’s worth, the Indian government has taken steps to simplify the process and improve the ease of doing business. You’ll certainly encounter heavy bureaucracy which poses a serious challenges to any foreign investor.

Whichever route you pick, it’s suggested that you seek help from lawyers, consultants, or specialized agencies familiar with Indian business regulations and practices to navigate the process efficiently.

Don’t make the mistake of going at it alone if you aren’t already living here and familiar with doing business in India.

Is Investing in India Worth It?

Considering the fact that India is expected to surpass China and the US as the world’s largest economy by the year 2050, it’s no wonder that foreign investors are turning their sights on India as their next investment opportunity.

Despite the complexities, limits, and strong home-country bias, investing in India as a foreigner is indeed possible.

You’ll find that ETFs and REITs in India provide the simplest routes to participating in the economy as a non-citizen. Those who are willing to traverse the bureaucratic red tape can even start their own business here.

Plenty of challenges remain, although India’s rapidly growing population and sheer size present a one-of-a-kind opportunity.

And if you choose one of the easier methods, such as ETFs and REITs, you’ll even find that investing in India is straightforward.


Investing in India: FAQs

Can Foreigners Own Property in India?

Yes, foreigners can own property in India, but with certain restrictions. Non-resident Indians (NRIs) and Persons of Indian Origin (PIOs) can purchase residential or commercial properties without approval from the Reserve Bank of India (RBI).

However, foreign nationals residing outside India can only acquire residential or commercial properties on lease, not exceeding five years.

How Much Does Real Estate in India Cost?

The cost of real estate in India varies widely depending on the location, type of property, and market conditions. In major cities like Mumbai and Delhi, prices can be quite high, with luxury apartments costing upwards of $1 million.

However, in smaller cities and towns, prices are more affordable, with a decent apartment costing around $50,000 to $100,000.

Are Foreigners Able to Start a Company in India?

Yes, foreigners can start a company in India, but the process can be complex and involves navigating through various regulations and bureaucratic procedures. Many sectors also have specific limits on foreign ownership.

The Indian government has taken steps to streamline the process and attract foreign investment, but challenges remain. It's advisable to seek professional guidance when setting up a business in India.

Is Using Crypto in India Legal?

The legal status of cryptocurrencies in India is currently in a gray area. While the government has not explicitly banned cryptocurrencies, it has issued warnings about the potential risks associated with investing in them.

The Reserve Bank of India (RBI) has also prohibited banks and financial institutions from dealing with cryptocurrencies. However, the Supreme Court of India has struck down the RBI's ban, and the government is currently working on a regulatory framework for cryptocurrencies.

Can Foreigners Trade Stocks in India?

Foreigners cannot directly trade individual stocks in India, as they are not allowed to set up brokerage accounts. However, they can invest in Indian stocks through exchange-traded funds (ETFs) listed in the US and other countries.

This is the easiest way for most foreign investors to participate in the Indian stock market.

What are the Largest India ETFs and Funds?

Some of the largest India ETFs and funds include:

  1. iShares MSCI India ETF (INDA)
  2. WisdomTree India Earnings Fund (EPI)
  3. Invesco India ETF (PIN)
  4. VanEck Vectors India Growth Leaders ETF (GLIN)

These ETFs provide exposure to a diverse range of Indian companies and sectors, allowing foreign investors to participate in the growth of the Indian economy.


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