NRIs favoured sons in investment

NEW DELHI: Overseas citizens of India (OCIs) may continue to be poor cousins when compared to non-resident Indians (NRIs). The finance ministry is against giving them rights akin to NRIs for investing in the country and has shot down a proposal in this regard by the ministry of overseas Indian affairs (MOIA).

North Block officials have questioned the rationale behind the Cabinet proposal mooted by MOIA. If OCIs are to be treated on par with NRIs, a change in regulations under the foreign exchange management Act (Fema) would be needed, a government source said. The official also pointed out that the OCI scheme was notified in 2005 by MOIA and further clarifications are not needed.

Under Fema regulations, any individual who has stayed in India for less than 182 days in a year is treated as an NRI. It is this factor which determines whether an individual is a non-resident or not. Non-residents are further classified into two categories — persons of Indian origin (PIOs) and NRIs. While the former refers to individuals who are of Indian origin but hold a passport of another country, the latter are individuals who hold an Indian passport but are settled in a foreign country.

OCIs are essentially PIOs who have the advantage of dual citizenship since such individuals are provided a special lifelong visa. The scheme, announced by the government in 2005, can be availed of by all PIOs except those residing in Pakistan and Bangladesh.

“As long as a person is a non-resident and of Indian origin, irrespective of whether he holds a foreign passport or an Indian passport, the same privileges should be conferred on them. OCIs should, thus, be treated on par with NRIs,” PwC principal consultant Goldie Dhama said.

Currently, Fema guidelines restrict PIOs residing in Pakistan and Bangladesh from investing in India while PIOs from Sri Lanka, Afghanistan, Iran, China, Bhutan and Nepal are barred from investing in immovable property in India. MOIA has sought to remove these restrictions by calling for treatment of OCIs on par with NRIs.