The union government has liberalised the Foreign Direct Investment (FDI) policy on investments for OCIs and PIOs, treating them at par with NRIs.
Change in NRI Investment Policy
With an aim to increase capital inflow into the country, the union cabinet has liberalised the Foreign Direct Investment (FDI) norms for Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs).
The amendments in the FDI policy were made by the Cabinet Committee on Economic Affairs, headed by Prime Minister Narendra Modi. This decision will give OCI cardholders as well as PIO cardholders parity with the NRIs in the educational, economic and financial sectors. As per the official statement, the amendment in FDI for NRIs, OCIs and PIOs will lead to greater forex remittances & investment.
The government has also amended Schedule 4 of the Foreign Exchange Management Act (FEMA) Regulations which advocates that investments made by NRIs, which now includes OCIs and PIOs, will be deemed to be domestic investment. Therefore, all the non-repatriable investments made by NRIs, OCIs and PIOs will not be bound by FDI rules and restrictions.
With the amendments and liberalisation NRIs, PIOs and OCIs will be provided an opportunity to utilise their dormant domestic resources, motivating them to invest funds in India without any repatriation rights.
Impact on the economy
The primary intention behind making the amendment is to encourage investments in India and treat non-repatriable NRI funds as domestic investments, as per official statement. The investors will now be able to acquire stakes in corporations and regulated market like any other domestic Indian citizen without being subjected to FDI norms. The government anticipates that capital inflow of foreign exchange remittance will gain further momentum with increased investments across sectors and eventually lead to economic growth of the country.
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