The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India has amended the Consolidated Foreign Direct Investment (FDI) Policy Circular of 2015with respect to investments by Non Resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs) through its Press Note 7 (2015 series).
Under the erstwhile FDI policy, an NRI meant an individual resident outside India who is a citizen of India or who is a person of Indian origin. This definition has been amended. NRI now means an individual resident outside India who is a citizen of India or is an OCI cardholder within the meaning of Section 7A of Citizenship Act, 1955. PIO card holders registered as such under Notification No. 26011/4/98 F.I, dated 19.8.2002, issued by the Central Government are deemed to be ‘Overseas Citizen of India’ cardholders.
Investment by NRI under Schedule 4 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 (FEMA Regulations) will deemed to be domestic investment at par with investments made by residents. The NRI investments on a non-repatriable basis will now be treated as domestic investments for purpose of sectoral caps, pricing guidelines, types of investment instruments, downstream investments, etc. However, we are of the view that NRI investments on a non-repatriable basis are to be made in accordance with Schedule 4 of the FEMA Regulations.
The press note shall take effect from June 18, 2015.
This measure is expected to result in augmenting inflow of foreign capital in key sectors, leading to economic growth of the country. This move will enable investments by NRIs, OCI cardholders and PIO cardholders under Schedule 4 on a non-repatriation basis, across sectors, without being subjected to any of the conditions associated to foreign investment.