Can NRI's invest in Mutual funds in India?
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According to sources first option is to invest in any of the India-focused offshore mutual funds or ETFs operating in your home country. These India dedicated mutual fund schemes invest in a diversified basket of Indian companies, usually with the help of research inputs from their Indian subsidiaries or other Indian fund houses. Several Indian fund houses also peddle their offshore funds abroad.
Meanwhile the advantage of investing through these offshore funds is that you can invest in your own currency. But the downside is many of these funds charge a steep entry load to investors.
Moreover besides these, NRIs can also invest in mutual funds domiciled within India, using their NRE or NRO account. These funds do not charge any entry load, but the investment is in rupees. NRI investors should be cognizant of the exchange rate risk while investing in rupee terms. If you are based in US or Canada, you can’t invest in certain funds and also, understand the tax formalities that you'll have to go through in your resident country.