The union cabinet has approved amendments to the foreign direct investment policy in order to provide that investments by non-resident Indians (NRIs), persons of Indian origin (PIOs) and overseas citizens of India (OCIs) on non-repatriable basis qualify to be treated as domestic investment.
''The union cabinet, chaired by Prime Minister Narendra Modi today gave its approval to review of foreign direct investment (FDI) policy on investments by non-resident Indians (NRIs), persons of Indian origin (PIOs) and overseas citizens of India (OCIs),'' an official release said.
The CCEA 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.
Now, more than 90 per cent of the FDI received in the country comes under automatic route.
However, the last year saw significant jump in the approval route though no new sector was placed under the government approval. In fact more sectors were liberalised during this period.
As against $1.19 billion received under the approval route in financial year 2013-14, during the financial year 2014-15 recorded FDI inflow of $2.22 billion with a growth of 87 per cent.