NRI India Investment

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NRI Investment in India is a positive step taken by our government to stabilize the national economy. The Reserve Bank of India has permitted the NRIs, Overseas Corporate Bodies (OCBs) and the Person of Indian Origin (PIOs) to make direct investments in the companies that have India origin. This is in alignment with the Automatic Route purchase of shares under the Portfolio Investment Scheme. In fact, this facility is extended to the companies which have partnership or proprietorship concerns as well.

Direct Investment Facilities offered to NRIs, PIOs & OCBs

NRIs have the facility to invest in shares or debentures which are convertible and belong to the Indian companies. Some of these direct investment facilities which are available to the NRIs can be classified under the following:-

  • Automatic Route of RBI (including Repatriation Advantages)
  • Investment with the Approval of Government
  • Other Investments (including Repatriation Benefits)
  • Investment benefit up to 100% Equity (excluding Repatriation Benefits)
  • Investments by NRIs (excluding Repatriation Benefits)
Some of these investment benefits also include the following:-

  • Deposits with Companies (Minimum Three Years)
  • Investment in Government Securities/Shares
  • Investment in Domestic Mutual Funds
  • Investment in Bonds Issued By Public Sector Undertakings (PSUs)
  • Purchase of Shares of Public Sector Enterprises (By NRIs/PIOs/OCBs)
Investments by NRIs without the benefits of Repatriation consist of the following:-

  • Deposits with Companies
  • Commercial Papers
  • Investment in Non Convertible Debentures
  • Money Market Mutual Funds

Rules for NRIs to invest in India:-

As per the Section 2(V) of Foreign Exchange Management Act 1999, the following three rules are applicable for NRIs who are eligible to invest in India:-

  • A person who resides outside India or has taken up employment outside India;
  • Conducting business activities outside India
  • Staying outside India for an indefinite or uncertain time period
  • A person has been in possession of his Indian passport (provided he is not a citizen of Pakistan or Bangladesh)
  • Either of his parents or grandparents were Indian citizen (as per the Indian Constitution/ Citizenship Act of 1955).

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