New Delhi: The government may soon take a decision on liberalising foreign direct investment norms for NRIs and overseas citizens of India as it aims to increase capital flows into the country. A decision in this regard is expected to be taken at the highest level soon, sources said.
In order to encourage more overseas investments into India, the government had last year set up a committee to look into the possibility of treating non-repatriable NRI funds as domestic investment.
The Committee has also looked at issues pertaining to streamlining the process for NRI investments into India and strengthening the reporting system of such investments by the non-resident Indians.
The government wants to channelise the funds of NRIs, who now have set up large businesses abroad by treating non-repatriable investments by NRIs as domestic investment. NRI is defined as a person who is residing outside India but has Indian citizenship.
The Narendra Modi-led government, which has liberalised the FDI policy for sectors such as defence, railways, construction development, medical devices and insurance is keen to tap both NRIs and foreign capital. As per the current FDI policy, NRI investors enjoy special treatment in certain sectors such as civil aviation.
In scheduled air transport service, 49 per cent FDI is allowed but for NRIs, 100 per cent investment is permitted. Similarly in non-scheduled air transport service, 74 per cent FDI is allowed but for NRI's 100 per cent is permitted.
Further a non-resident Indian or a PIOs outside India can invest in the capital of a firm on non-repatriation basis provided the amount is invested by inward and the firm or proprietary concern is not engaged in any agricultural/plantation or real estate business or print media sector. During the April-December period of current fiscal, FDI rose by 27 per cent to $21.04 billion as against $16.56 billion in the same period last fiscal.
Healthy inflow of foreign investments into the country help in balancing the country's balance of payments and stabilise the value of rupee. India is estimated to require around $1 trillion over five years to overhaul its infrastructure sector, including ports, airports and highways to boost growth.
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