In India today there has been asign ificant relaxation of regulations on investment and production. Private participation is now permitted in virtually all industries. Foreign investment is welcome and is generally treated at par with do mesticinvestment. There is ample room for all modes of investment. India also encourages the inflow of modern technology and management practices into the country. Proposed foreign investment is a very small percentage of total proposed investment which underlines the tremendous potential for further in flows. The opening up of capital intensive infrastructure industries, such as Power, Telecom, Oil and Natural Gas, Roads and Highways and Ports offer vast opportunities to foreign investors. In consonance with the changing times the Government of India(GOI) has assured changes in various sectors of the economy which a reel aborated below:

For NRIs

Who is a Non-resident Indian?

An Indian citizen who stays abroad for employment, business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is an on-resident. (Persons posted in UNorganisations and officials deputed abroad by Central/ state governments and public sector undertakings on temporary assignments are also treated as non-residents). Non-resident foreign citizens of Indian origin are treated on par with non-resident Indian citizens(NRIs).

Who is a person of Indian origin?

For investments in immovable properties A foreign citizen (other than a citizen of Pakistan, Bangladesh, Afghanistan, China, Iran, Bhutan, SriLanka,or Nepal) is deemed to be of Indian origin if, (I)he held an Indian passport at any time, or(ii) he or his father or paternalgrand-father was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57of1955).

What is an OCB?

Overseas Corporate Bodies (OCBs) are bodies predominantly owned by individuals of Indian nationality or origin resident outside India and include overseas companies, partnership firms, societies and other corporate bodies which are owned, directly or indirectly ,to the extent of atleast 60 percent by individuals of Indian nationality or origin resident out side India as also overseas trusts in which at least 60percent of the beneficial interest is irrevocably held by such persons. Such ownership interests hould be actually held by them and not in the capacity as nominees. The various facilities granted to NRIs are also available with certain exceptions to OCBs so long as the ownership/beneficial interest held in them by NRIs continues to beat least 60 percent.

Are OCBs required to produce any certificate regarding ownership/beneficial interest in them by NRIs?

Yes. In order to establish that the ownership/beneficial interest in any OCB held by NRIs is not less than 60percent, the concerned body/trust is required to furnish a certificate from an overseas auditor/chartered accountant/certified public accountant in form OAC where the ownership/beneficial interest is directly held by NRIs, and inform OAC1 where it is held in directly by NRIs and further that such ownership interest is actually held by them and not in the capacity as nominees.

What are the various facilities available to NRIs/OCBs?

• NRIs/OCBs are granted the following facilities:
• Maintenance of bank accounts in India.
• Investments in securities/shares of,and deposits with,Indian firms/companies.
• Investments in immovable properties in India.

Investment in Immovable Property

Do non-resident Indian citizens require permission of Reserve Bank to acquire residential/commercial property in India?

No.An Indian citizen resident outside India does not require any permission to acquire any immovable property in India other than agricultural/plantation property or a farm house. However the purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with banks in India.

Do foreign citizens of Indian origin require permission of ReserveBank to purchase immovable property in India for their residential use?

ReserveBank has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase immovable properties other than agricultur all and/ farmhouse/ plantation property,in India. They are,therefore, not required to obtain separate permission of Reserve Bank or file any declaration.

In what manner the purchase consideration for the immovableproperty should be paid by foreign citizens of Indian origin under the general permission?

The purchase consideration should be met either out of inward remittances in foreignexchange through normal banking channels or out of funds from any non resident accounts maintained with banks in India.

Can such property be sold without the permission of Reserve Bank?

Yes.Reserve Bank has granted general permission for sale of such property. However, where the property is purchased by another foreign citizen of Indian origin, funds towards the purchase consideration should either be remitted to India or paid out of balances in non-resident accounts maintained with banks in India.

Can sale proceeds of such property if and when sold be remitted out of India?

In the event of sale of immovable property other than agriculturall and /farmhouse/ plantation property in India by a person resident outside India, who is a citizen of India, or a person of Indian origin, the authorized dealer may allow repatriation of the sale proceeds outside India, provided all the following conditions are fulfilled:-

The immovable property was acquired by the seller in accordance with the provisions of the Exchange Control Rules/Regulations/Law inforceat the time of acquisition, or the provisions of the Regulations framed under the Foreign Exchange Management Act,1999;
The sale takes place after three years from the date of acquisition of such immovable property of from the date of payment of final installment of consideration for its acquisition, which ever is later;
The amount to be repatriated does not exceed(a) the amount paid for acquisition of the immovable property in foreignexchange received through normal banking channels or out of funds held in foreign currency non-resident account or(b) the foreign currency equivalent, as on the date of payment, of the amount paid where such payment was made from the funds held innon-resident external account for acquisition of the property; and in the case of residential property, there patriation of sale proceeds is restricted to not more than two such properties.
In all other cases prior permission 9 RBI is required

Can foreign citizens of Indian origin acquire or dispose of residential property by way of gift?

Yes.Reserve Bank has granted general permission to foreign citizens of Indian origin to acquire or dispose of immovable properties other than agricultural l and/farmhouse/plantation property by way of gift from or to a relative who may be an Indian citizen or a person of Indian origin whether resident in India or not.

Can NRI's/PIO's rent out the properties(residential/commercial) if not required for immediate use?

Yes.Reserve Bank has granted general permission for letting out any immovable property in India. The rental income or proceeds of any investment of such income is eligible for repatriation.

Can NRIs obtain loans for acquisition of a house/flat for residential purpose from financial institutions providing housing finance?

Reserve Bank has granted general permission to certain financial institutions providing housing financee. g. HDFC,LIC Housing Finance Ltd.,etc. ,to grant housing loans to non-resident Indian nationals for acquisition of a house/ flat for self occupation subject to certain conditions. The purpose of loan margin money and the quantum of loan will beat par with those applicable to housing loans to residents. Repayment of loan should be made within a period not exceeding 15 years out of inward remittances or out of funds held in the investor's NRE/FCNR/NRO Accounts.

Can authorised dealer grant loans to NRIs for acquisition of a flat/house for residential purposes?

Authorised dealers have been granted permission to grant loans to non-resident Indian nationals for acquisition of house/flat for self-occupation on their return to India subject to certain conditions Repayment of the loan should be made with in a period not exceeding 15 years out of inward remittance through banking channels or out of funds held in the investors 'NRE/FCNR/NRO accounts.

Can authorized dealer grant housing loan to non-residents of Indian originality where he is a principle borrower with his resident closer elative asaco-obligent/guarantor or where the land is owned jointly by such NRI borrower with his resident close relative?

Yes.However,insuchcases,the payment of margin money and repayment of the loan installments should be made by the NRI borrower.

What are the guidelines for acquisition of agricultural l and /plantation property/farmhouse by NRIs and foreign citizens of Indian origin?

All requests for acquisition of agricultural l and/plantation property/farmhouse by any person resident outside India may be made to The Chief General Manager, Reserve Bank of India, Central Office, Exchange Control Department, Foreign Investment Division(III), Mumbai400001.