For NRIs looking to build long-term wealth in India, the allocation across asset classes becomes crucial, particularly when the objective is to balance growth, liquidity and diversification.Raghvendra Nath, MD, Ladder Up Wealth Management, believes equities should form the core of an NRI’s India portfolio, while fixed income and alternative investments can provide diversification.In this edition of ETMarkets NRI Talk, Nath shares how he would allocate a ₹10 crore surplus—with 60% in equities, 20% in alternatives and 10% in fixed income—and explains why he would avoid gold and real estate for an NRI investing from thousands of kilometres away. Edited Excerpts –Q) What are the biggest hurdles NRIs still face when investing in Indian equities and mutual funds, despite the process becoming increasingly digital?A) The biggest hurdles are mostly related to regulation and paperwork. For instance, you cannot repatriate money easily from an NRO account. Every time you repatriate money, even from your NRE account, there is a certain amount of paperwork involved.It is not very easy and for somebody sitting thousands of miles away, these become real irritants. In equity markets as well, when you are investing in direct stocks, NRI investments are clubbed with FPI limits, so many stocks become unavailable for investment by NRIs.Additionally, when an NRI is investing into stocks—either directly or through mutual funds—there is compulsory TDS, which is not the case for resident Indians.So, for an NRI who has no income other than from equities and mutual funds, having to file a tax return and claim the tax back is a real nuisance.These are not very big hurdles, but they are minor irritants that stand in the way of making investments easy.Q) With the rupee hitting Rs 96 per USD, has it impacted NRI investments into India? What is the general mood?A) Yes, of course. Because this depreciation has happened over a very short period and very fast, nobody has had the time to react.Whatever little gains investors had in equities over the last one to one and a half years have been washed away by the depreciation, because after October 2024, the markets have been largely flat.Moreover, there are FCNR issuances happening currently, where the RBI had provided an FCNR swap facility with relaxations on interest rate ceilings—leading to higher than standard interest rates—for 3-5Y tenor deposits, applying to fresh deposits and renewals on maturity.The original window was until 30 September 2026, but because stronger than expected inflows amounting to $52.3 billion were mobilised by banks by 13th August, the deadline was pulled up to 31st August 2026.This means many NRIs have already leveraged themselves and a lot of the interest has shifted there. India also continues to remain a very attractive investment destination.The depreciation may have hurt a few people, but it is also true that every time the rupee has depreciated over a short span of time, the subsequent periods have been periods of great stability.I would say that the NRIs have a real opportunity for investing in India currently because the rupee has already reached levels that were completely unexpected.With an augmented level for forex reserves that RBI shall have and a general consensus globally on USD weakness, there is a very high probability that INR depreciation is going to be very nominal over the next few years.Q) When deciding between an NRE and an NRO account, what are the key differences from an investment and repatriation standpoint?A) NRE is the completely freely repatriable account. There are no conditions attached; any amount of money can be repatriated. NRO, on the other hand, allows only for partial repatriation, up to USD one million a year.There are some other key differences as well. The NRO account is a rupee account i.e., an ordinary account, into which all income generated from local Indian sources other than equities and mutual funds is credited.For example, if an NRI sells a property, that money cannot go directly into the NRE account, it must go into NRO. The same applies when he earns interest from bonds, rental income or other such income. All this money first goes into NRO, and then one can repatriate one million dollars a year.Read more: ETMarkets NRI Talk | 50-60% in equities? R Sivakumar Axis MF CIO’s Rs 1 crore NRI portfolio playbookQ) Are NRIs under-allocated to Indian equities compared with their overall exposure to India?A) Yes, NRI population is highly under-allocated into Indian Equities despite a fantastic performance over the last couple of decades.The total NRI holdings in Indian listed equities stood at roughly Rs 5.2 lakh crore as of March 2026, against total market capitalisation of around Rs 461 lakh crore, so just over 1% of the market. Most NRIs have been investing money in tax-free bank deposits and real estate. One must also first look at the historical record.NRIs, therefore, should look at equities as the primary avenue for investment in India because most of the money NRIs send to India is long-term in nature; they do not plan to use it for day-to-day living expenditure, for which they may be investing in their home country.Since most NRI remittances are long-term, the Equity market can provide much better returns than real estate and fixed deposits.Q) How should NRIs think about the tax treatment of equity mutual funds, bonds, FDs, or other investment vehicles?A) Every country has its own laws. If an Indian wants to invest into the US, he will have to comply with the tax laws of that country. But taxation cannot become the basis of investing. If the US markets have attractive opportunities than one should capitalise on it irrespective of taxation.The government has always maintained a fair, level playing field between NRIs and resident Indians as both pay the same amount of tax. As long as that level playing field is maintained, an NRI should not hesitate to invest into India merely because of tax considerations.Q) Are you seeing greater interest from NRIs in newer products such as AIFs, PMS, and private equity?A) Yes. Sophisticated NRIs, specifically the ones who have a long-term positive outlook on the Indian economy are looking at these alternative products for investment into India.Q) If an NRI has Rs 1 crore of surplus money to invest in India over five to seven years, how would you divide it across equities, fixed income, gold, real estate, and alternatives?A) If he is only investing one crore, then alternative funds may not have any place, and nor will real estate. So let me take the surplus as ten crores instead.If somebody has a ten-crore surplus, he should invest around sixty percent into equities, ten percent into fixed income, and twenty percent into alternatives.He should avoid gold and real estate because gold is an international commodity, they can buy it in their home countries as well, if they have a positive view on it and real estate does not make sense for an NRI investing thousands of kilometres away; because the responsibility of managing it will always be a concern.Most of the investments that NRIs do in India should be in liquid assets like Equities and Fixed Income.Q) Could we see more India-focused global funds, or India-domiciled products in GIFT City, designed specifically for overseas Indians who want Indian exposure?A) Yes, that is a big trend we are seeing, and it is a very healthy trend. All the problems of investing—whether regulatory issues, filing of tax returns, or taxation—get taken care of if an NRI uses the GIFT City route rather than coming in directly.A number of managers have set up investment vehicles in GIFT City for Indian investors, and all NRIs should look at these vehicles seriously. It makes the process of investing extremely easy.GIFT City offers the same benefits as other investment hubs—Singapore, Hong Kong, the Cayman Islands, the British Virgin Islands, DIFC, etc, where many people go—thus making the vehicle extremely attractive.In fact, Ladderup Asset Managers is also launching a Fund of Funds (FoF) through GIFT City. It will be investing in mutual funds, and therefore, there will not be any withholding tax making it a highly tax-efficient tool for NRIs.Read more: ETMarkets Smart Talk | Large caps look better for next 24 months, but hidden gems remain in smallcaps: Divam SharmaQ) What financial product is currently missing from the Indian market that could significantly improve the investment experience for NRIs?A) One space where India does not have enough options is the hedge fund space, which is very large in the developed world.It has not emerged in India yet, because the range of possibilities is limited. That is one area where more options can emerge, not only for NRIs, but for domestic investors as well. The other space is fixed income.Currently, RBI approval is required for every fixed income instrument before it can be issued to NRIs, which limits the number of possibilities in fixed income outside the banking system, and the government should think about easing these norms.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)