Various schemes, policies and incentives have been announced
by the Government of India, in coordination with its various laws, so
as to provide ample investment opportunities to the Overseas Indians.
They give vital information on the various facilities available to NRIs/
PIOs, such as, of Bank Accounts, investment rules and regulations, etc.
There is the 'Foreign
Direct Investment (FDI) Policy', which governs the various aspects
of foreign investment in India. This policy aims to attract foreign direct
investment (FDI) in all the permitted sectors of Indian economy as well
as maximize its developmental impact and spin-offs. FDI is freely permitted
in almost all sectors of Indian economy. It can be made through two routes,
namely Automatic Route and Government Route. Under the former route, the
foreign investor does not require any approval from the Reserve Bank of
India (RBI) or Government of India for the investment. While, under the
latter route, prior approval of Foreign Investment Promotion Board, Ministry
of Finance, Government of India is required for investment. These conditions
apply to the overseas Indians as well.
One of the important Scheme, being the 'Portfolio Investment
Scheme (PIS)', under which NRIs/ PIOs are allowed to invest in shares
of listed Indian companies in recognized stock exchange, that is, to purchase
and sell shares and convertible debentures issued by Indian companies.
For this, they can approach the designated branch of any Authorized Dealer
(AD) bank, authorized by RBI to administer the Scheme, for permission
to open a NRI/NRO account for routing investments under the Scheme.
NRIs/PIOs can invest on repatriation and non-repatriation
basis under PIS route upto 5% of the paid up capital of the company/ paid
up value of each series of debentures of listed Indian companies. The
aggregate paid-up value of shares or debenture purchased by all NRIs/
PIOs cannot exceed 10% of the paid-up capital of the company. This limit,
however, can be raised by the Indian company to 24% by passing a General
Further, NRIs/PIOs are permitted to open bank accounts in
India out of funds remitted from abroad, foreign exchange brought in from
abroad or out of funds legitimately due to them in India. Such accounts
can be opened with banks specially authorised by the Reserve Bank in this
behalf, that is, Authorised Dealer (AD). There are schemes which deals
with various types of bank accounts' facilities available to NRIs or PIOs,
which are as follows:-
- Non-Resident (External) Rupee Account Scheme (NRE
Under this scheme, NRIs and PIOs are eligible to open
NRE Accounts with authorized banks in India. These accounts are convertible
foreign currency accounts designated in Indian rupees and can be maintained
in the form of savings, current or term deposit accounts. For opening
such accounts, funds are required to be remitted to India through
any bank from the country of residence of the prospective account
holder. Opening of joint accounts with other NRIs/ PIOs is also permissible.
Non-residents can enjoy the following benefits by maintaining NRE
Accounts:- (i) term deposit for one year and above made by non-residents
carry interest at higher rates than those available to residents in
India; (ii) interest on deposits and any other income accruing on
the balances in the accounts are free of Indian income tax; (iii)
balances in the accounts are free of wealth-tax; (iv) gifts out of
NRE account to close relatives are exempt; (v) entire credit balance
(inclusive of interest earned thereon) can be repatriated outside
India at any time without reference to Reserve Bank; (vi) local disbursement
from these accounts can be made freely; (vii) account holders can
avail of loans/ overdrafts from banks against security of fixed deposits
from out of their NRE accounts; etc.
- Foreign Currency (Non-resident) Account (Banks)
Scheme (FCNRB) -
Under this scheme, NRIs are eligible to open and maintain
FCNR accounts with authorised dealer. However, opening up of such
accounts by individuals/ entities of Bangladesh/ Pakistan nationality/
ownership requires prior approval of Reserve Bank. Accounts can be
opened with funds remitted from outside India through normal banking
channels or funds received in rupees by debit to account of a non-resident
bank maintained with authorised dealer in India or funds which are
of repatriable nature in terms of regulations made by Reserve Bank.
They can also be opened by transfer of funds from existing NRE/FCNR
accounts. Further, FCNR(B) account can only be opened in the form
of term deposits. The deposits are accepted for terms exceeding one
year but less than three years. A non-resident can open a joint account
with other NRIs/PIOs. Opening up of joint account by non-resident
with a person resident in India is not permitted.
- Non-resident Ordinary Rupee (NRO) Account Scheme -
Under this scheme, any person resident outside India
may open NRO account with an authorised dealer or an authorised bank
for the purpose of putting through bonafide transactions denominated
in Rupees, not involving any violation of FEMA rules and regulations
made thereunder. However, opening up of accounts by individuals/ entities
of Bangladesh/ Pakistan nationality/ ownership requires prior approval
of Reserve Bank. NRO Accounts may be opened and maintained in the
form of current, savings, recurring or fixed deposit accounts. Rates
of interest applicable to these accounts and guidelines for opening,
operating and maintenance of such accounts shall be in accordance
with directives/ instructions issued by Reserve Bank from time to
time. The accounts may be held jointly with residents and/ or with
non-residents. Besides, NRO Account (Current/ Savings) can be opened
by a foreign national of non-Indian origin visiting India, with funds
remitted from outside India through banking channel or by sale of
foreign exchange brought by him to India.
Other Schemes are:-
Citizenship of India (OCI) Scheme - This scheme became operational
from 02.12.2005 to allow dual citizenship, that is, holding Indian citizenship
and citizenship of a foreign country simultaneously. A foreign national,
who was eligible to become citizen of India on 26.01.1950 or was a citizen
of India on or at anytime after 26.01.1950 or belonged to a territory
that became part of India after 15.08.1947 and his/her children and grand
children, provided his/her country of citizenship allows dual citizenship
in some form or other under the local laws, is eligible for registration
as OCI. Minor children of such persons are also eligible. However, if
the applicant had ever been a citizen of Pakistan or Bangladesh, he/she
will not be eligible for OCI.
of Indian Origin Card (PIO Card) Scheme 2002 - This scheme has been
launched, in the wake of revision of PIO Card Scheme of 1999, as a comprehensive
scheme for PIOs. It aimed to make the journey of PIOs back to India simpler,
easier, flexible and absolutely hassle free. It confers on PIO a set of
privileges and permit them visa-free entry into the country. Under this
Scheme, Persons of Indian Origin up to the fourth generation (great grand
parents) settled throughout the world, including a spouse of a citizen
of India except for a few specified countries, are eligible. The Card
is to be issued to eligible applicants through the concerned Indian Embassies/High
Commissions/Consulates and for those staying in India on a long term visa,
from the concerned Foreigners Regional Registration Officer (Delhi, Mumbai,
Kolkata, Chennai) and also from the Ministry of Home Affairs, Foreigners
Division. The fee for the card, which have a validity of 15 years, is
Rs.15,000/- and for the minor (below 18 years), the fee is Rs.7,500/-.
This scheme entitles PIOs to a wide range of economic, financial and cultural
benefits, which includes:-
- No visa required for visiting India.
- No separate "Student Visa" or "Employment
Visa" required for admissions in Colleges/Institutions or for taking
up employment respectively.
- A PIO Card holder will be exempt from the requirement
of registration if his continuous stay on any single visit in India
does not exceed 180 days.
- Parity with Non-resident Indians (NRIs) in respect
of facilities available to the latter in economic, financial and educational
fields, etc. These facilities include:-
- acquisition, holding, transfer and disposal of immovable
properties in India except in maters relating to the acquisition
of agricultural/plantation properties.
- facilities available to children of NRIs for getting
admission to educational institutions in India including medical
colleges, engineering colleges, IITs, IIMs, etc. under the general
- various housing scheme of LIC, State Government and
other Government Agencies.
- special counters at the immigration check posts for
- All future benefits that would extend to NRIs would also
be made to PIO Card holders; etc.