The objective of India’s foreign investment policy is to invite and encourage foreign direct investment (FDI) in India

By on 13-11-2018

GOVERNMENT EASES NON RESIDENT INDIAN’S INVESTMENT NORMS

The objective of India’s foreign investment policy is to invite and encourage foreign direct investment (FDI) in India.The regulatory approval process has been substantially liberalized to facilitate investment in India. As part of this of Government of India have approved the proposal of treating investment made by NRIs on non-repatriable basis as domestic investment . Changes are likely boost investments by NRIs in Indian companies and immovable property in India.

 Non-repatriable investments by Indian expatriate, including NRIs, OCIs and PIOs, will be treated as domestic investments and will not be subject to foreign direct investment caps.

''The government has reviewed the FDI policy relating to investments by NRIs, PIOs and OCIs. It has been decided to amend the definition of NRIs as contained in the FDI policy ... and also to provide that for the purposes of FDI policy, investment by NRIs under Schedule 4 of FEMA... regulations will be deemed to be domestic investment at par with the investment made by residents,'' a press note said.

 The CCEA had approved the addition of a new para, which states, ''Investment by NRIs under Schedule 4 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations will be deemed to be domestic investment at par with the investment made by residents.'

 'Non-resident Indian' (NRI) means an individual resident outside India who is citizen of India or is an 'overseas citizen of India' cardholder within the meaning of section 7 (A) of the Citizenship Act, 1955. 'Persons of Indian origin' cardholders registered as such are also deemed to be ''Overseas citizen of India' cardholders''.

The decision that NRI includes OCI cardholders as well as PIO cardholders is meant to align the FDI policy with the stated policy of the government to provide PIOs and OCIs parity with non-resident Indians (NRIs) in respect of economic, financial and educational fields.

Further, the decision that NRI investments under Schedule 4 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations will be deemed to be domestic investment made by residents, is meant to provide clarity in the FDI policy as such investment is not included in the category of foreign investment.

The measure is expected to result in increased investments across sectors and greater inflow of foreign exchange remittances, leading to economic growth of the country, the release added.

The government's FDI policy aims at keeping maximum of the sectors under automatic rule and regulating only those sectors which are strategic in nature or have security concerns.