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Under the Foreign Direct Investment policy of India, the Non-resident Indians have been allowedtoinvestinIndiabothonthenon-repatriableandrepatriablebasis,subjecttospecific conditions.ForthepurposeofinvestmentsinIndia,Non-residentIndianhasbeencategorized as the separate categories ofinvestors. • Non-residentIndianshavesofarenjoyedfollowingadditionalprivileges,incomparisonto foreigninvestors. • Non-residentIndiansarepermittedtoinvestinthepartnershipfirmsaswellassole proprietorships, subjectto specific terms and conditions. • Non-residentIndiansarepermittedtotradeonthestockexchangesinIndia. • Sectoralcapsarehigherforthenon-residentIndiansinsectorslikeair transportactivities, servicesunderthecivilaviationsectorandtheconstructiondevelopment. • Marching ahead with the reformist approach, the Indian Government has further liberalized theFDIortheforeigndirectinvestmentpolicyrelatingtotheinvestmentinIndiabythenon- resident Indians through the Press note No 7 (2015 series). The changes brought about two- fold- • Change in definition of Non-residentIndians • The definition of non-resident Indian has been revised to mean that an individual resident outsideIndiawhoisalsoacitizenofIndiaoranOverseasCitizenofIndiacardholder.Notethat individuals who are persons of Indian Origin cardholders are deemed to be the Overseas CitizenofIndiacardholdersasthePersonsofIndianOrigincategoryhasbeenmergedwithan overseas citizen of India category. With the merge of the persons of Indian Origin category withtheOverseasCitizenofIndia,non-residentIndianswouldnowactuallymeananoverseas residentwhoiseithercitizenofIndiaoranoverseascitizenofIndia. • Non-resident Indian investments on the non-repatriablebasis • Allinvestmentsbythenon-residentIndiansonthenon-repatriablebasiswillbedeemedto thedomesticinvestmentonparwithinvestmentsmadebytheresidentIndians.Inorderto qualify for the treatment, non-resident Indians won’t be allowed to repatriate the money overseas. • ALAnalysis • Thechangeinthedefinitionofthenon-residentIndiansistheresultofpresentamendments to the Indian Citizenship Act, 1952 and it simplifies the categories of the foreign investors in India. • The liberalization in the Foreign Direct Investment policy is expected to increase the investments by non-resident Indians in Indian businesses. As the non-resident Indian investment on the non-repatriable basis will be treated as the domestic investments, pricing guidelines,restrictiveconditionsrelatingtothesectoralcaps,andnatureofinstrumentswon’t apply to any such investments. Now, non-resident Indians can invest in sectors in which the foreign direct investment is restricted to a specific percentage. For instance, in the case of print media, foreign direct investment is restricted to 26 percent. Any of the non-repatriable investment by non-resident Indians won’t be counted towards the foreign direct investment while calculating the 26 percent limit, thereby allowing space for other foreign investors to investintothesectors.Furthermore,non-residentIndianscaninvestinthesectorswherethe Create PDF in your applications with the Pdfcrowd HTML to PDFAPI PDFCROWD
foreign direct investment isprohibited. Non-residentIndiansarerequiredtoadheretofollowingconditionstoqualifyforthedomestic investmentstatus: They are prohibited from convertible debentures or purchasing shares of companies engaged in the business of Chit Fund, Nidhi company or the company engaged in plantation/agriculturalactivitiesortherealestatebusinessorthefarmhouseconstructionor dealing in Transfer of DevelopmentRights. NolimitationonbuyingofconvertibledebenturesorsharesofIndiancompanieswhetherby publicissuesorprivateplacementonanon-repatriablebasis. Consideration for buying of convertible debentures or shares shall be paid by way of the inwardremittancethroughthenormalbankingchannelsfromabroadoroutofthefundsheld in the bank account maintained with Authorized Dealer or with the authorized Indian bank as the case maybe. Proceedsofredemptionorsaleundertheschemeshallbecreditedtonon-residentspecial rupee account r the non-resident ordinaryaccount. PREV ARTICLE Comments Thereis0commenton"PolicyliberationininvestmentbyNRIsinIndia". Submit AComment Create PDF in your applications with the Pdfcrowd HTML to PDFAPI PDFCROWD
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