The Cabinet on Thursday decided to relax foreign direct investment (FDI) norms for NRIs, treating non-repatriable investments made by them on a par with domestic funding. As a result, NRI investments will now not be treated as FDI and will be exempted from sectoral restrictions, limits and approvals.

The move seeks to encourage greater foreign exchange remittances and investment by the overseas community as well as attract investment in key sectors, such as insurance, defence and railways.

A decision in this regard was taken by the Cabinet Committee on Economic Affairs, headed by Prime Minister Narendra Modi, which met here on Thursday.

The meeting also decided to broaden the definition of NRIs to include Overseas Citizens of India (OCIs) cardholders and Persons of Indian Origin (PIOs) 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 NRIs in respect of economic, financial and educational fields,” an official release said.

The measure is expected to result in increased investments across sectors and greater inflow of foreign exchange remittance leading to economic growth of the country, it added.

At present, civil aviation is the only sector that allows NRIs to invest up to 100 per cent in scheduled air transport service against a FDI cap of 74 per cent.

FDI inflows up

As per government figures, FDI inflow under the approval route increased to $2.22 billion in 2014-15, against $1.19 billion received under the approval route in 2013-14.

“This is a result of the fast pace of approvals being accorded by the government and confidence of investors in the foreign investment climate of the country,” the release said.

Related Topics
comment COMMENT NOW