A study by the UN Population Division concluded that more than 15 million migrants from India are living overseas. The Indian diaspora is the highest in comparison to all other countries in the world. Year after year, thousands of people migrate from India to go abroad either to pursue their education or to make a living by doing offshore jobs. Through the passage of time, several of them have even settled in foreign countries along with their families. Such people of Indian origin and those who become Non Residents (NRI’s) are the ones who form for a large portion of the direct inflow of cash into the country.
Looking at the past few decades, we can see that NRI’s have shown superior interest in Indian Investments and are more willing to park their funds in them. On July 5, 2019, the Finance Minister of India, Nirmala Sitharaman presented her first budget to the nation and the world. Non-resident Indian service professionals, businessmen, and home-makers keenly watched and listened to her well-crafted budget. Their anticipation was met with positive policy changes.
After a thorough analysis of the budget speech, there are many proposals which have been curated to impact and boost the economic growth of the country. One such proposal is the merger of investments made through the NRI portfolio route with the foreign direct investment route. The intention is to encourage NRI investments into the country. Under this move, there will be a singular regime for foreign investors and it will also regulate the investments brought in by Persons of Indian Origin and Non-resident Indians.
A Foreign Portfolio Investment refers to a group of assets which includes equities, bonds, and cash equivalents. These portfolios are directly held by an investor or managed by a finance professional.
The merger of the FDI and NRI route is progressive in nature and has been adopted from the key recommendations made by the H R Khan committee. It is set up to bring in larger pools of capital in a professionally structured manner. Investment managers had contested the cap placed on NRI investment through the FDI route and this new proposal should be received well by global fund managers.
The Securities and Exchange Board of India stated that if OCI/NRI holdings in assets under management of foreign portfolio investments are below 50% and 25% respectively, then such persons will be allowed to be constituents of FPI.
In addition to this, the budget proposed a big move to issue Aadhaar Cards to Non-resident Indian passport holders, without them having to wait for the stipulated 180 days. Aadhaar will be issued to NRI’s on arrival in India.
The government’s decision to issue Aadhaar cards will be extremely beneficial for NRI’s as it is both an identity card as well as a proof of address as it consists of both biometric and demographic data.
Not only that, but it will also quickly facilitate KYC’s for NRI’s. This expediting of KYC’s will allow NRI’s to financially transact within the country. The interchangeability of PAN and Aadhaar also mentioned in the budget speech will help in the filing of their income tax returns.
NRI’s can now easily do business in India. There are great opportunities within the country and in sectors such as health, infrastructure, agriculture, education, and technology.