India’s economy has been a powerhouse. It is the fifth largest economy in the world and is forecasted to grow by 7-8% in FY 2025. Despite challenges like the pandemic in 2021, India has shown exceptional growth.

As the Indian government paves the way for a business-friendly environment, individual investors have various investment opportunities, including invoice discounting in India.

As the Indian government paves the way for a business-friendly environment, individual investors can invest in are presented with many investment opportunities. In this blog, we’ll delve into India’s most promising investment options and uncover why investing in India could be one’s key to financial growth and security. 

In this blog, we’ll delve into India’s most promising investment options and uncover why investing in India could be one’s key to financial growth and security. 

Let’s get started!

Investments Offering High Returns in India

Here is a list of investment avenues in India that offer high returns:

1. Invoice Bill Discounting:

Individual investors looking for stable returns without locking away their cash for years must include invoice discounting in their portfolio. Invoice discounting is a financial solution that helps businesses manage their working capital requirements by using their sales invoices as collateral to obtain funds from institutional and retail investors. Businesses can strategically manage their finances by discounting sales invoices and ensuring working capital funds are available.

altGraaf, a specialised platform, offers individual investors the option of invoice discounting in India through 5 types of invoice discounting products for a short tenure of 60 to 90 days. 

Below is a brief overview of the products: 

1. altWings

altWings offers individual investors the opportunity to invest against the invoice receivables of business via altGraaf for a 30-90-day tenure against 12-14% annual returns. altGraaf’s dedicated team of experts comprehensively analyses every company’s financial statement, cash flows, revenue earned, credibility of the company’s management, shareholding patterns, profit margins, and more. Only after a company meets altGraaf’s stringent criteria they are listed on altGraaf for individual investors, offering investors transparency and confidence.

2. altBlu

 altBlu is a product of altGraaf with two versions: trade credit insurance and escrow control, and the other with escrow control only. The former provides added security in insurance protection compared to the latter version. With rigorous due diligence, altGraaf ensures only creditworthy borrowers access the platform, offering investors a balanced blend of security and growth potential.

3. altArmour

altArmour enables investors to finance businesses through invoice discounting in India, which is secured by trade credit insurance. The insurance fully protects investors’ principal and interest if the buyer defaults. The product offers a 90-day tenure with an 11-12% yield, managed through an escrow account. altGraaf processes insurance claims to ensure investor repayments even in case of defaults.

4. altSmart

altSmart allows individual investors to invest against businesses’ invoice receivables via the altGraaf platform for a 30-90-day tenure. The investment is secured by a bank guarantee with escrow control on repayments, ensuring returns even in the event of buyer default. With altSmart, one of the safest product of invoice discounting in India, investors diversify portfolios with stable returns and contribute to economic growth while enjoying a hassle-free investment experience.

Like all investments, invoice discounting in India carries risks, and investors must review all investment opportunities carefully before investing. However, with the wide choice of products of invoice discounting in India across the risk spectrum from very low to high risk, investors can select opportunities that align with their risk appetite and return expectations.

Primary Benefits of Investing in Invoice Discounting

1. Short Tenure (30 days to 90 days)
2. Fixed Returns 
3. Not linked to market fluctuations
4. Competitive Yields

Primary Risks

1. Credit Risk (Ability of the borrower to repay)
2. Liquidity risk (Ability to liquidate before maturity)

2. Mutual Funds:

Mutual funds offer attractive investment opportunities in India tailored to individual investors’ financial goals and risk tolerance. Unlike traditional bank deposits, mutual funds generally provide higher returns if held for long periods but are associated with market-linked risks and are primarily suited for long-term financial wealth creation. Investment in Mutual Funds is facilitated through NRO or NRE accounts. Returns vary based on fund types (debt, equity, or hybrid) and investment durations.

3. Gold

Investing in gold has always been a preferable traditional investment choice among Indians. Interest rates, geopolitical unrest, and market volatility influence gold prices. Gold does not yield dividends, interest, or rental income, unlike stocks, bonds, or real estate. While gold prices have historically increased in India, it’s important to remember that the intrinsic value of gold is also dependent on economic conditions. 

4. NRE Savings Account

NRE (Non-Residential External) savings accounts enable Indians residing abroad to maintain the income they earn abroad in foreign or domestic currencies. The principal and the interest are fully repatriated, meaning NRIs can transfer these funds back to their country of residence without any restrictions. Furthermore, the interest earned in these accounts is tax-exempt in India, even though it is not earned there. However, the interest rate is significantly lower than the interest offered by products at altGraaf.

5. Real Estate:

In recent years, investing in real estate in India, especially in major cities like New Delhi, Mumbai, Bengaluru, Pune, and Gurugram, has been a lucrative option. Many investors have bought multiple properties in these cities and earned rental income. However, it’s essential to understand the risks involved, as real estate investments can be unpredictable and highly illiquid. Rental yields in India typically are meagre compared to other markets. Therefore, thorough analysis and consideration of all options are crucial before making investment decisions in the real estate market.

Why should one invest in India?

While traditional investments like real estate, mutual funds, equities, bonds, gold, and savings accounts are great products to have in one’s investment portfolio, adding other fixed-income investment options like altGraaf’s innovative invoice discounting products can help investors diversify and generate potentially higher portfolio returns. The five new innovative invoice discounting in India products by altGraaf offer a unique opportunity to boost your portfolio risk-adjusted returns. 

Here are a few reasons why altGraaf helps individual investors invest better.

1. Exhaustive Due Diligence: At altGraaf, a three-month comprehensive due diligence process evaluates businesses’ suitability for invoice financing. This rigorous assessment effectively filters out high-risk borrowers to bring quality investment opportunities to individual investors on the platform.
2. Escrow Control: Most invoice discounting products in altGraaf have escrow account control benefits. This arrangement involves buyers making payments directly to an escrow account managed by altGraaf, ensuring sellers cannot access these funds. It enhances transparency and security in fund management during repayments to investors.
3. Bank Guarantee and TCI: The bank guarantee and insurance provide additional security for investors’ money (altSmart, altArmour, and altBlu). In the event of payment default, altGraaf will invoke the bank guarantee within 20 days, ensuring prompt reimbursement. Similarly, in a non-payment situation, altGraaf will facilitate the insurance claim through the seller. In either scenario, altGraaf safeguards the principal and interest and the funds are redistributed directly to investors via the escrow account controlled by altGraaf.
4. An array of products catering to varied risk requirements: altGraaf offers five products of invoice discounting in India tailored to varying risk appetites and investment tenures. With options spanning different risk levels and tenures, altGraaf’s product suite stands as an advantageous offering, catering to the needs of a broad spectrum of investors. 

Conclusion

With the rise of globalisation, investment opportunities for Non-Resident Indians (NRIs) have expanded significantly. India’s investment landscape offers promising returns, evidenced by the staggering $953.143 billion in Foreign Direct Investment (FDI) over 23 years from April 2020 to September 2023. Understanding these investment avenues is crucial for individuals to make informed decisions and capitalise on wealth-building opportunities in India.

Frequently Asked Questions

1. What are the investment options available for Indians staying abroad?

Investment options for Indians staying abroad include real estate, invoice discounting, equities, bonds, derivatives, NRE & NRO savings accounts, and mutual funds. All these avenues carry different risks and returns.

2. What is an NRE/NRO account, and who can open it?

The NRE account benefits Indians residing outside the country. They can keep money earned outside India either in foreign currency ( in this case, the United Arab Emirates Dirham) or in Indian currency. Account holders can repatriate funds back to their residing country whenever needed without limitations. 

However, once account holders transfer money to an NRO (Non-Resident Ordinary) account, they cannot repatriate funds back to their residing country. NRO account is an Indian Rupee account, and all funds can only be in local Indian currency. As mentioned, only after the account holder transfers the money to an NRO account can one choose to invest in altGraaf. 

3. Who can invest in the invoice bill discounting offered by altGraaf?

All individuals residing in India, as well as Indians living outside India who have an NRO account, can invest in the products offered by altGraaf.

4. Why should Indians staying abroad invest in India?

Indians staying abroad should invest in India for the following reasons:

• Earn good returns on investments by investing in one of the fastest-growing economies in the world
• Long-term financial wealth creation 
• Diversify their investments
• Support immediate or extended families living in India or plan future retirement in India.

5. Which income earned by Indians staying abroad is taxable in India?

Income generated in India is subject to taxation, including property rent and capital gains from property sales, as per existing income tax regulations. However, NRIs are eligible for tax exemptions if the total income in India is below the exemption limit. Moreover, they can avail of additional deductions of up to Rs. 2 lakh on interest payments and Rs. 1.5 lakh on principal repayments of home loans, along with stamp duty and registration fees under Section 80C.

References:

https://www.bajajallianzlife.com/life-insurance-guide/investments/nri-investments-in-india.html
https://www.maxlifeinsurance.com/nri-plans/uae/nri-savings-plan