Investments by non-resident Indians to be considered domestic: GoI

 The Dollar Business Bureau The Union Cabinet, chaired by the Prime Minister of India Narendra Modi, on Thursday, gave its approval to review the Foreign Direct Investment (FDI) Policy on investments by Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs). In this regard, the Cabinet gave its nod for the amendments to be incorporated in the new FDI policy. As per the proposed amendment, the definition of NRI also includes OCIs as well as PIOs and a decision in this regard is meant to align the FDI policy with the Government’s stated policy in order to provide the PIOs and OCIs an equal recognition with that of NRIs in terms of economic, financial and educational fields, informed an official release. Towards ensuring that the investment by an NRI on non-repatriable basis is domestic, the Cabinet gave its approval to add statement that ‘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.’ Through this statement, the government intends to provide better clarity in the FDI policy as such investment by NRI is not included in the category of foreign investment. This measure is expected to result in increased investments across various sectors and further ensure greater inflow of foreign exchange remittance leading to economic growth of the country. Prior to this, the government has revised FDI policies in various sectors which was firstly reviewed in case of allowing 100% FDI under automatic route in entire range of rail infrastructure, raise in cap on FDI in defence sector to 49%, among other key sectors. To boost infrastructure creation in the country, the government, by creating easy exit norms and encouraging affordable housing, the government had reviewed FDI policy in the construction development sector. Since the launch of ‘Make in India’ in September 2014, the government has been pitching for improved Indian manufacturing sector and subsequently promoted ease of doing business, which has drawn a good response from the foreign investors. Foreign investors have now shown unprecedented interest for investment in the manufacturing sector and with the current move to ease norms for FDI policy in case of NRIs is expected to bring in many more investments into the country.    

May 22, 2015 | 7:22 pm IST.