Non-resident Indians (NRIs) looking to invest in India need to weigh several factors before building a portfolio. Among the asset classes often recommended, gold typically receives a modest allocation of 5–10%. For a Rs 1 crore portfolio, this translates to between Rs 5 lakh and Rs 10 lakh directed toward the yellow metal, either through physical gold, gold exchange-traded funds (ETFs), or sovereign gold bonds.
Why gold matters in an NRI portfolio
Gold serves as a diversification tool and a hedge against currency volatility and inflation. For NRIs who may repatriate funds in the future, gold can help balance the overall risk of an equity-heavy portfolio. The suggested allocation of 5–10% is illustrative and should be adjusted based on an individual's global portfolio, existing India exposure, liquidity needs, risk appetite, and tax situation.
Key considerations before investing
Before committing to any asset class, NRIs should assess their entire global portfolio to avoid overconcentration in one geography or sector. For gold specifically, issues such as import duties, capital gains tax on sale, and repatriation rules apply. Gold held in India — whether as coins, bars, or through paper instruments — may attract long-term capital gains tax if held for more than three years. NRIs must also understand how dividends or gains from gold funds are taxed under the Income Tax Act.
Another practical challenge is creating a seamless framework to invest, monitor, and eventually repatriate wealth. Many NRIs find it easier to buy Indian equities or mutual funds but struggle with ongoing portfolio management and the eventual transfer of funds abroad. Gold, being a less liquid asset in physical form, requires careful planning around storage and sale timing.
Building the complete portfolio
The illustrative allocation for a Rs 1 crore portfolio splits across major asset classes:
- Equities: 55–65% in Indian stocks or equity mutual funds.
- Fixed income: 15–20% in bonds, fixed deposits, or debt funds.
- Gold: 5–10% via gold ETFs, sovereign gold bonds, or physical gold.
- Alternatives: 5–10% in real estate investment trusts (REITs), private equity, or other non-traditional assets.
This mix should be complemented by real assets such as property and further diversification across sectors and market capitalisations. The actual weight of each asset depends on the NRI's age, income stability, and financial goals.
Gold as a long-term store of value
For NRIs who intend to keep a portion of their wealth in India, gold offers a culturally familiar store of value that has historically preserved purchasing power over decades. Sovereign gold bonds, in particular, provide annual interest and tax efficiency compared to physical gold. However, NRIs cannot purchase these bonds directly through their NRE or NRO accounts in the primary market; they may buy them on the secondary market or use non-repatriable investment routes.
Track the live gold price to time purchases and stay informed about rupee volatility, which directly affects the cost of gold for NRI investors.
Key takeaways
- Gold allocation of 5–10% is recommended for a Rs 1 crore NRI portfolio in India.
- Before investing, NRIs must review their global portfolio, tax liabilities, and repatriation rules.
- Gold can be accessed via ETFs, sovereign gold bonds, or physical bullion, each with distinct tax treatments.
- The illustrative portfolio also includes 55–65% equities, 15–20% fixed income, and 5–10% alternatives.
Common questions
What gold instruments can NRIs buy in India?
NRIs can invest in gold ETFs listed on Indian stock exchanges, physical gold (subject to import rules), and sovereign gold bonds on the secondary market. Each instrument has different tax and repatriation implications.
Is gold taxable for NRIs in India?
Yes. Gains from the sale of gold held for more than three years are treated as long-term capital gains and taxed at 20% with indexation benefit. Short-term gains are added to income and taxed per the applicable slab. Sovereign gold bonds also attract interest income taxed as per the NRI's tax bracket.
Can NRIs repatriate gold or gold proceeds?
Physical gold held in India generally cannot be taken abroad. Proceeds from the sale of gold (paper or physical) can be repatriated subject to applicable foreign exchange rules and tax clearance, provided the investments were made through permissible channels.
Every NRI’s financial situation differs. Consulting a registered investment advisor and a tax professional who understands cross-border regulations is advisable before finalising any allocation.