How Can NRIs Invest in USD - Expert Advice

Every month, Nisha in Dubai watches her savings shrink without spending a single dirham.

She earns in AED. She saves in AED. But her Indian fixed deposits are in rupees. And the rupee keeps falling.

In 2015, one dollar bought about ₹63. By early 2026, it crossed ₹90. That's a 38% drop in the rupee's value over a decade.

Nisha's 7% NRE FD return? Wiped out by currency loss.

She's not alone. Thousands of NRIs in the UAE face the same invisible erosion.

At Belong, we hear this concern daily in our WhatsApp community of NRIs.

The good news?

NRIs can now invest directly in USD without converting to rupees. And some of these options are tax-free, fully repatriable and regulated by Indian authorities.

This guide covers every USD investment option available to NRIs.

From the safest fixed deposits to higher-return mutual funds. With real numbers, tax rules and a step-by-step process.

Why Should NRIs Think in Dollars, Not Rupees?

If you earn in dollars or dirhams, your wealth should grow in the same currency. Here's why.

The Indian rupee has depreciated by roughly 3–5% annually against the US dollar over the past 20 years, according to FundsIndia research published in February 2025.

In 2025 alone, the rupee fell over 5.2% against the dollar, crossing the ₹90 mark for the first time.

Let's put that in real terms.

Say you converted $10,000 into rupees in 2015 at ₹63. You invested in an NRE FD earning 7% annually.

After 10 years, your rupee corpus looks impressive. But when you convert it back to dollars at ₹90, your real return drops dramatically. The currency loss eats into your gains.

Now compare that to a USD investment earning 5% annually. Your $10,000 stays in dollars.

No conversion loss. No currency guesswork. Your $10,000 becomes roughly $16,289 at 5% compounded over 10 years.

👉 Tip: Use Belong's Rupee vs Dollar Tracker to see historical depreciation trends before deciding between INR and USD investments.

The math is clear. For NRIs who earn, spend and plan to retire in a dollar-linked economy, USD-denominated investments protect your real wealth.

The Silent Cost of INR Investments for NRIs

Most NRIs don't calculate the "currency cost" of their Indian investments. Here's what it looks like.

Source: Calculations based on typical bank rates. Rupee depreciation assumed at historical average. Actual results may vary.

The NRE FD looks better on paper in rupees. But in dollar terms, the USD FD delivers more. The rupee's depreciation eats away ₹12 per dollar over five years in this example.

This is the silent cost that catches many NRIs off guard.

What Are the USD Investment Options for NRIs?

NRIs now have multiple ways to invest in US dollars without converting to rupees. Here's a quick overview before we go deeper into each.

Sources: IFSCA regulations, bank websites, Belong FD comparison tool

Let's break each one down.

GIFT City USD Fixed Deposits: The Safest Starting Point

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If you're new to USD investing, start here.

GIFT City (Gujarat International Finance Tec-City) is India's first International Financial Services Centre. The Foreign Exchange Management Act (FEMA) treats it as foreign territory for financial purposes.

Banks operating here are called IFSC Banking Units (IBUs). They accept deposits in foreign currencies, primarily USD.

Here's what makes GIFT City FDs different from other deposits.

Currency: Your money stays in USD. No conversion to rupees. No currency risk.

Interest Rates: USD deposits currently offer 4.5–6% annually, which is competitive with US bank rates and higher than most FCNR deposits.

Tax Treatment: Interest earned on GIFT City FDs is completely tax-free in India. For UAE-based NRIs who pay zero income tax in their country of residence, this means 100% of your returns stay with you.

Tenure Flexibility: Unlike FCNR deposits that require a minimum one-year lock-in, GIFT City FDs start from as little as 3 months. Some banks offer tenures as short as 7 days.

Premature Withdrawal: This is a big differentiator. With FCNR deposits, you forfeit the entire interest if you withdraw before one year. With GIFT City FDs, you pay a small penalty (typically 0.25–0.50%) but keep the rest of your interest.

Repatriation: Both principal and interest are fully repatriable to your country of residence. No caps. No complicated documentation.

Which Banks Offer GIFT City FDs?

Major Indian banks have set up IBUs in GIFT City. These include SBI, HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank and IndusInd Bank.

They are regulated by the IFSCA (International Financial Services Centres Authority), the unified regulator for GIFT City.

👉 Tip: Compare GIFT City FD rates across all banks instantly using Belong's NRI FD Comparison Tool. Rates change frequently, so always check before locking in.

FCNR Deposits: The Traditional USD Option

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Before GIFT City, FCNR (Foreign Currency Non-Resident) deposits were the only way for NRIs to keep money in foreign currency within India.

FCNR deposits let you invest in USD, GBP, EUR and other currencies with Indian banks.

They're regulated by the RBI. Interest is tax-free in India under the Income Tax Act.

But FCNR deposits have limitations that GIFT City FDs have addressed.

Sources: RBI FEMA guidelines, IFSCA regulations, bank websites

FCNR deposits still make sense if you have a long-term horizon and want the comfort of RBI regulation. But for flexibility, better rates and shorter tenures, GIFT City FDs are the stronger choice.

👉 Tip: Don't put all your savings into a single deposit type. Consider FD laddering spreading your money across multiple tenures for better liquidity management.

GIFT City Mutual Funds: USD Growth Beyond Fixed Returns

Fixed deposits protect your capital. But they won't beat inflation over the long term.

That's where GIFT City mutual funds come in.

These are offshore funds launched by Asset Management Companies (AMCs) operating within GIFT City. They are regulated by IFSCA and denominated in foreign currencies, primarily USD.

Here's what makes them compelling for NRIs.

Invest and Redeem in USD. No currency conversion headaches. Your investment and your returns are both in dollars.

Tax-Free Capital Gains. Under Section 10(4D) of the Income Tax Act, capital gains from specified funds registered with IFSCA are exempt from Indian income tax for non-residents. Compare this to regular Indian mutual funds, where NRIs face 12.5–30% TDS on redemptions.

Open to US and Canada NRIs. Regular Indian mutual funds restrict investors from the US and Canada due to FATCA compliance issues. GIFT City funds don't have this restriction.

Low Entry Points. In September 2025, Tata Asset Management launched the Tata India Dynamic Equity Fund at GIFT City with a minimum investment of just $500 (Source: Business Standard). This was the first retail-friendly mutual fund option in GIFT City.

Diverse Fund Types. GIFT City now hosts over 200 funds (Source: IFSCA), including equity funds, debt funds, hybrid funds and global diversification funds. Options include the DSP Global Equity Fund for international exposure and Edelweiss Greater China Equity Fund for Asian markets. You can explore all available options through Belong's mutual funds platform.

👉 Tip: Explore available GIFT City mutual funds and compare returns using Belong's Mutual Funds Explorer.

Alternative Investment Funds (AIFs): For High-Net-Worth NRIs

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If you have $150,000 or more to invest, GIFT City AIFs open up a different category of USD investments.

AIFs are pooled investment vehicles that invest across private equity, real estate, infrastructure and structured debt. GIFT City hosts over 200 AIFs as of mid-2025 (Source: IFSCA).

There are three categories.

Category I AIFs focus on startups and infrastructure. Category II AIFs include private equity and real estate. Category III AIFs use hedge fund strategies like long-short positions and arbitrage.

The minimum investment is $150,000 per investor (Source: IFSCA Circular, February 2025), with a typical three-year lock-in period.

Tax Treatment: Category III AIFs investing in Indian equity through GIFT City are fully exempt from capital gains tax in India. For UAE NRIs, this means tax-free returns on both ends.

AIFs are not for everyone. They carry higher risk, have lock-in periods and require larger capital. But for NRIs seeking portfolio diversification beyond FDs and mutual funds, they offer USD-denominated exposure to India's growth story.

👉 Tip: Explore the AIFs available in GIFT City using Belong's AIF Explorer. Compare strategies, minimum investments and historical performance.

Global Savings Accounts in GIFT City

Beyond term deposits, NRIs can also open Global Savings Accounts at GIFT City IBUs.

These accounts let you hold balances in multiple foreign currencies, including USD, GBP, EUR, CAD, AED, AUD, SGD and HKD. Think of them as multi-currency wallets with a trusted Indian bank.

Interest rates on savings balances range from 2.5–5% annually, depending on the bank and currency. You can use these accounts to park surplus funds, receive wire transfers and fund your GIFT City investments.

Currently, banks like ICICI Bank, HDFC Bank, SBI and Axis Bank offer these accounts through their GIFT City IBUs.

This is not a high-return investment. It's a convenience layer. You hold your dollars in India, earn modest interest and keep the flexibility to move money across investment products as needed.

What Most Blogs Miss: The Tax Edge for UAE NRIs

Here's something many NRIs overlook, and it's arguably the biggest advantage of USD investments through GIFT City.

India and the UAE have a Double Taxation Avoidance Agreement (DTAA). Under this agreement, income that's already exempt in India (like GIFT City FD interest or mutual fund capital gains) is not taxed again in the UAE.

And the UAE has zero personal income tax.

So the equation for UAE NRIs looks like this:

Tax in India = Zero (GIFT City exemption)

Tax in UAE = Zero (no income tax)

Your effective tax rate = Zero

Compare this to regular Indian investments.

NRO FD interest is taxed at 30% (with TDS deducted upfront). Regular Indian mutual fund gains are taxed at 12.5–30% depending on holding period. Even NRE FDs, while tax-free in India, expose you to currency conversion losses.

GIFT City gives you the rare combination of dollar denomination, tax-free returns and full repatriation. No other NRI investment channel offers all three.

👉 Tip: Make sure your NRI residential status is correctly determined before investing. Your tax obligations depend entirely on this classification.

How the Budget 2026 Makes GIFT City Even More Attractive

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The Union Budget 2026 delivered a significant boost to GIFT City investments.

The government doubled the tax holiday for GIFT City IFSC businesses to 20 years, up from the existing 10 years (Source: Business Standard, February 1, 2026). After the holiday period, business income will be taxed at a concessional 15%.

This builds on the Budget 2025 extension of sunset clauses to March 2030 (Source: PwC analysis), which covered capital gains exemptions, fund relocation benefits and other IFSC incentives.

What does this mean for NRI investors? Two things.

First, the regulatory environment is getting more stable, not less. The government is clearly committed to growing GIFT City as India's global financial hub. Your investments have long-term policy certainty.

Second, more AMCs and financial institutions will set up in GIFT City. More competition means better products, better rates and more choices for NRI investors.

GIFT City already hosts 35 banks, over 337 capital market intermediaries and 272+ AIFs (Source: Kotak Bank). The ecosystem is maturing rapidly.

Step-by-Step: How to Start Investing in USD Through GIFT City

Here's the practical process.

Step 1: Verify Your Residential Status

You need to be an NRI or OCI to invest in GIFT City. Under FEMA and the Income Tax Act, you're classified as an NRI if you hold an Indian passport and have stayed outside India for more than 182 days in the financial year.

Step 2: Complete KYC

Most GIFT City platforms now offer digital KYC. You'll need your passport, overseas address proof (like a UAE visa or Emirates ID) and PAN card. The process typically takes 10–15 minutes online.

Step 3: Choose Your Product

Start with USD FDs if you're new. They're simple, safe and offer competitive returns. Once comfortable, consider mutual funds or AIFs for growth.

Step 4: Transfer Funds

You can transfer money from your UAE bank account via SWIFT transfer directly to the GIFT City IBU. Some platforms also accept transfers from NRE accounts. Since the account is in USD, no conversion is needed.

Step 5: Book Your Investment

Through the Belong app or directly through bank portals, select your tenure, amount and product. Interest or returns are credited to your account on maturity.

Timeline: Typically 2–3 days from KYC to your first investment.

👉 Tip: Download the Belong app to compare rates, complete KYC and book your first GIFT City USD FD all in one place.

Myth vs Reality: Common Misconceptions About USD Investing

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Myth: "GIFT City is too new to be trusted."

Reality: GIFT City's IFSC has been operational since 2015. It's regulated by IFSCA, a statutory body established by the Government of India. The banks operating there SBI, HDFC, ICICI, Axis are the same banks you already trust. They simply operate a separate branch under IFSCA regulation.

Myth: "USD returns are lower, so I'll earn less."

Reality: In absolute rupee terms, yes, INR FDs show higher headline rates. But after adjusting for rupee depreciation of 3–5% annually, your real dollar returns from INR investments shrink significantly. A 5% USD return often beats a 7% INR return in dollar terms.

Myth: "I need a PAN card to invest in GIFT City."

Reality: While a PAN card is helpful (and you should get one anyway for compliance), some GIFT City products allow investment without a PAN card. Check specific product requirements.

Myth: "Repatriating money from GIFT City is complicated."

Reality: GIFT City investments are fully repatriable. Both principal and returns can move to your country of residence without the caps and paperwork of standard NRO repatriation (which is limited to $1 million per financial year).

What Happens If You Return to India?

This is a question that stops many NRIs from investing in GIFT City. "What if I move back?"

Here's what you need to know.

When you return to India and your status changes from NRI to Resident, your existing GIFT City investments don't automatically close. But new investments may be restricted once you become a Resident Indian.

Your RNOR (Resident but Not Ordinarily Resident) status provides a buffer. For the first 2–3 years after returning, you may qualify as RNOR, which allows you to continue enjoying tax benefits on foreign income.

During this transition, you can systematically rebalance your portfolio, moving from USD-denominated GIFT City products to rupee-denominated options as your needs change.

👉 Tip: Plan your return-to-India financial transition at least 12–18 months before you move. This gives you time to optimise tax benefits under RNOR status.

GIFT City USD Investments vs UAE Bank Deposits

Many NRIs in the UAE default to parking their savings in local bank accounts. But UAE savings accounts typically offer 0.1–0.5% interest.

Even UAE fixed deposits max out at around 4–5% for USD. And they don't come with the tax benefits that GIFT City offers.

Here's how they compare.

Sources: UAE bank websites, IFSCA regulations

GIFT City USD FDs often match or beat UAE bank rates. And they give you the added benefit of keeping your money connected to India's financial ecosystem, which matters if you plan to eventually retire in India or invest in Indian markets.

Building a Complete USD Investment Portfolio

Not every NRI needs the same approach. Here's a framework based on your risk appetite and investment horizon.

Conservative (Safety-First NRI)

Allocate 70% to GIFT City USD FDs and 30% to FCNR deposits across different banks. Use laddering to spread tenures. This protects your capital in dollars with guaranteed returns and zero tax.

Balanced (Growth-Oriented NRI)

Allocate 50% to GIFT City USD FDs, 30% to GIFT City mutual funds (like the Tata India Dynamic Equity Fund) and 20% to FCNR deposits. This gives you a stable base with growth potential from equity exposure.

Aggressive (Wealth-Builder NRI)

Allocate 30% to GIFT City FDs, 40% to GIFT City mutual funds and 30% to AIFs. This maximises your long-term wealth creation potential but requires a 5+ year horizon and tolerance for short-term volatility.

👉 Tip: Use Belong's 5-Layer Investment Framework to build a structured approach that matches your financial goals and risk tolerance.

Risks You Should Know About

No investment is risk-free. Here's what to watch for with USD investments.

Interest Rate Risk.

GIFT City FD rates are linked to global interest rates. If the US Federal Reserve cuts rates, GIFT City USD FD rates may decline too. Lock in favourable rates when they're available.

Ecosystem Maturity.

GIFT City is growing fast, but it's still newer than established centres like Singapore or Dubai. Product variety is expanding, but it's not yet as deep.

Liquidity Constraints.

AIFs have lock-in periods of 1–3 years. Mutual funds are more liquid, but still check exit load and redemption timelines.

Regulatory Evolution.

As a relatively new IFSC, rules and regulations may evolve. Stay updated through trusted sources and communities.

These are manageable risks. The regulatory direction is clearly supportive of NRI investors in GIFT City. But go in with your eyes open.

The Bottom Line

NRIs don't have to accept rupee depreciation as an unavoidable cost of investing in India.

USD investments through GIFT City offer a legitimate, regulated and tax-efficient path to grow wealth in your earning currency.

GIFT City USD FDs give you safety with 4.5–6% returns and zero tax.

Mutual funds give you growth potential with dollar-denominated exposure. And AIFs open up sophisticated strategies for larger portfolios.

The key takeaway: match your investment currency to your earning currency. If you earn in dollars or dirhams, your core investments should be in dollars too. Rupee exposure can be a tactical choice, not your default.

Thousands of NRIs are already making this shift. Many of them discuss strategies, share experiences and get expert guidance in our WhatsApp community.

Join them to learn from real NRI investors who've navigated these decisions.

When you're ready, download the Belong app. Compare FD rates, explore GIFT City mutual funds, browse AIFs and track GIFT Nifty all in one place built specifically for NRIs.

Your dollars deserve to work as hard as you do. Start investing in the currency you earn in.

Sources: RBI, IFSCA, Income Tax Department of India, SEBI, HDFC Bank, ICICI Bank, SBI, Axis Bank, Business Standard, PwC, Invesco Mutual Fund, FundsIndia Research