Non-resident Indian is a person who does not reside in India but was born in India or is a person of Indian Origin. By Person of Indian Origin we mean a foreign citizen (except a national of Pakistan, Afghanistan, Bangladesh, China, Iran, Bhutan, Sri Lanka and/or Nepal), who:
- at any time held an Indian passport
- Either of their parents/ grandparents/ great-grandparents were born and permanently resident in India.
- is a spouse of a citizen of India or a PIO
India being one of the most growing economical nation provides an immense opportunity and endeavour to the NRI’s to invest in India and generate income for themselves and also for the nation.
Ways to Setup Business in India by NRI
- Incorporating a Company in India.
- Wholly owned subsidiaries.
- By entering into a Joint Venture in India.
- By opening a Branch Office / Liaison Office / Project Office in India.
- Starting a partnership firm with a person resident in India.
Avenues for investment in India
Reserve Bank of India has granted general permission to NRIs/PIOs, for undertaking direct investments in Indian companies, under the Automatic Route, purchase of shares under Portfolio Investment Scheme, investment in companies and proprietorship/partnership concerns on non-repatriation basis and for remittances of current income.
Further, NRI/PIO are permitted to invest in securities under FDI Scheme on repatriation basis.
Foreign Exchange Management Act, 1999 (FEMA) acts as a regulatory act behind the investment made by NRI/ PIO in India. FEMA provides that Foreign Investment by a NRI can be done in either of the two ways:-
- On repatriation basis
- On non-repatriation basis
Investment by NRI in India on Repatriation basis
A Non-resident Indian may invest in India on repatriation basis in below ways:-
- NRIs may purchase or sell shares, convertible preference shares, convertible debentures and warrants of an Indian company or units of an investment vehicle under the Portfolio Investment Scheme through a branch designated by an Authorised Dealer.
- RBI has granted permission for NRI to invest in Mutual Funds. NRI is required to have an NRE or FCNR Bank Account in India to invest in mutual fund in India.
Investment by NRI in India on Non-Repatriation basis
A Non-resident Indian (NRI), including a company, a trust and a partnership firm incorporated outside India and owned and controlled by non-resident Indians, may invest in India in following ways:-
- An NRI may acquire, on non-repatriation basis, any security issued by a company without any limit either on the stock exchange or outside it.
- An NRI may invest, on non-repartition basis, in units issued by an investment vehicle without any limit, either on the stock exchange or outside it.
- An NRI may contribute, on non-repatriation basis, to the capital of a partnership firm, a proprietary firm or a Limited Liability Partnership without any limit.
- RBI has granted a general permission to Mutual Funds to offer mutual fund schemes on non-repatriation basis. The amount of the investment should be debited to NRO account of the NRI investor. It is important to note that no permission of Reserve Bank either by the Mutual Fund or the NRI investor is necessary.
- On non-repatriation basis NRIs can freely purchase Central and State Government securities and National Plan/ Savings Certificates by remittances from abroad through normal banking channels or by withdrawing funds from their non-resident accounts with banks in India.
Entry Route for Investment
There are two entry route for investment in India i.e Approval Route where approval of Government is required and Automatic Route where no approval is required from Government of India.
Sectors under Automatic Route
- Plantation Sector
- Mining of metal and non-metal ores
- Mining – Coal & Lignite
- Food Product Retail Trading
- Broadcasting Carriage Services
- Broadcasting Content Service
- Air Transport Service
- Maintenance and Repair organizations; flying training institutes; and technical training institutions
- Construction Development
- Industrial Parks
- Duty Free Shops
- Railway Infrastructure
- Asset Reconstruction Companies
- Credit Information Companies
- White Label ATM Operations
- Non-Banking Finance Companies
- Petroleum & Natural Gas – Exploration activities of oil and natural gas fields
- Petroleum refining by PSUs
- Infrastructure Company in the Securities Market
- Commodity Exchanges
- Power Exchanges
Sectors under Approval Route
- Mining and mineral separation of titanium bearing minerals and ores – up to 100%
- Defence – Beyond 49% & up to 100%
- Publishing/printing of scientific and technical magazines/specialty journals/ periodicals – up to 100%
- Publication of facsimile edition of foreign newspapers – up to 100%
- Print Media – Publishing of newspaper and periodicals dealing with news and current affairs – up to 26%
- Print Media – Publication of Indian editions of foreign magazines dealing with news and current affairs – up to 26%
- Air Transport Service – Scheduled, and Regional Air Transport Service – Beyond 49% & up to 100%
- Satellites – establishment and operation – up to 100%
- Telecom Services – Beyond 49% & Upton 100%
- Trading – Single Brand Retail Trading (SBRT) – Beyond 49% & unto 100%
- Banking – Private Sector – Beyond 49% & up to 74%
- Banking – Public Sector – up to 20%
- Private Security Agencies – Beyond 49% & up to 74%
- Broadcasting Content Service
- FM Radio – up to 49%
- Uplinking of ‘News & Current Affairs’ TV Channels – Upto 49%
- Trading – Multi Brand Retail Trading (MBRT) – Upto 51%
Prohibited Foreign Investment
Foreign investment in any form is prohibited in a company or a partnership firm or a proprietary concern or any entity which is engaged or proposes to engage in the following activities:-
- Business of chit fund, or
- Nidhi company, or
- Agricultural or plantation activities, or
- Real estate business, or construction of farm houses, or
- Trading in Transferable Development Rights (TDRs).
Foreign Investment in any form results in the growth of the economy as FDI brings a boost to the economic sector as well as the business concerns. RBI has made a robust and efficient ways for investment by NRI or Foreign Entities in India.
For setting up a business in India as NRI we can guide you through our various skill set out of which few we are listing here:-
- We facilitate interactions with advisors who will brief about the gr opportunities and challenges in India.
- We coordinate and organize business meetings with potential partners.
- We can arrange for visits to relevant industrial areas to interact with management representatives of other companies.
- We assist our clients in vetting the initial business plan and in the absence of one we support in developing a strategic business plan for the client.
- We support in incorporating a legal entity and advice on having a trusted senior member on their board.
- We advise on designing, developing and implementing client policies in abidance with the regulations as per the Indian laws.
- We can ensure that companies comply with tax related compliances which are applicable to them.
For any Queries or Suggestions contact:-