Gold and diamonds are deeply rooted in the Indian tradition and still play an important part in its culture and economy today. Signs of wealth and prosperity, they are also viewed as popular investment options in India. If as an Indian expat you are considering such NRI investment in India, read on to learn how these markets operate, whether gold is worth more than diamonds, and what you need to qualify for diamond and gold investment in India, for example, if NRIs can invest in sovereign gold bonds.
NRI investment in India
Gold investment in India
Diamond investment in India
Diamonds vs. gold
Sending money to India: the best way for NRIs
NRI investment in India
A non-resident Indian (NRI) is a holder of an Indian passport aged between 18 and 60 years old and residing outside India for more than 182 days in a previous financial year or planning to do so. To explore any investment options in India, an NRI must be assigned a valid Permanent Account Number (PAN) and have a Non-Resident Ordinary (NRO) or Non-Resident External (NRE) bank account. At the same time, a Portfolio Investment Scheme (PINS) account is not required to invest in gold instruments. Looking for the most efficient way to transfer funds for your investments? Send money to India with Profee.
Gold investment in India
Over the last decade, the price of gold nearly doubled, increasing from around $1,300 per troy ounce to nearly $2,800. In comparison, diamond prices have stagnated over the past two decades. Is gold worth more than diamonds, then? Not literally, of course, but as a source of long-term profit, it might as well be. For a detailed understanding of various financial strategies, explore our investing in India as an NRI explained.
Available gold investment options in India
- Physical gold (jewellery, coins, bars)
- Digital gold (backed by 24-carat physical gold)
- Gold Exchange-Traded Funds (Gold ETFs) (backed by one gram of 99.5% fine gold)
- Gold debt-oriented mutual funds
Can NRIs invest in sovereign gold bonds (SGBs)?
According to the Reserve Bank of India (RBI) and the Foreign Exchange Management Act (FEMA) guidelines, this type of gold investment in India is not allowed for NRIs. The only exception is SGBs bought by an NRI while still residing in India. In this case, the bonds can be held up to their maturity (typically, eight years with an early redemption option after the first five years).
Taxation on NRI gold investment in India
| Period of holding | Tax rate |
|---|---|
| Long-term investments (over 24 months) | 12.5% |
| Short-term investments (under 24 months) | According to income tax brackets |
Gold received as a gift from relatives is not taxable. However, there are caveats, and any NRI investment in India should be conducted after consulting a tax expert.
Diamond investment in India
Diversifying your investments? Learn about other financial opportunities in our guide on IT jobs in Europe for Indians.
There is ongoing debate over whether diamonds can be considered a true investment. Their pricing is subjective, influenced by the 4Cs: cut, clarity, colour, and certification. This makes the secondary diamond market less developed compared to gold.
Over the past 20 years, diamond prices remained largely stable, with the exception of a temporary surge post-pandemic due to postponed events like weddings.
Nevertheless, diamonds attract many NRIs who seek to diversify their assets and protect their money from inflation in the long run.
Gold vs. diamonds: which is the better investment?
The answer depends on:
- Strategic goals of your NRI investment in India
- Risk tolerance
- Expected returns
Regardless of the choice, the most important issue for most NRI investors is transferring money into their Indian bank account from abroad.
Sending money to India: the best way for NRIs
Making secure and efficient transfers is crucial for NRIs. See the best options to send money to India.
