The government’s decision on foreign investment front by considering NRI and Overseas Citizens of India investment as domestic investment will make the role of Diaspora more important.
Already, many measures were introduced in the last two years or so to give more economic, financial and educational rights to the two diaspora categories –the NRIs and Overseas Citizens of India (OCI).
What makes the diaspora segment very important for India is their size. India is having the second largest expatriate community in the world after China. Besides, the community is very progressive and is showing strong connectedness with the motherland.
It is because of this size and dynamism of the Indian communities abroad that the government has created a Ministry for Overseas Indian Affairs; the first country to create a Ministry for expatriates.
Early this year, the government has merged PIO card with OCI cards and now there is only Overseas Citizens of India category.
Interestingly, as per the new guidelines, domestic treatment for direct investment by the diaspora groups will be given to investment on non-repatriable basis. This means that the investment and the profit associated with it will be here for a long time.
At present, NRI/OCIs have different investment rights in the country including that on physical assets like land and financial assets like bank deposits, equities and bonds, mutual funds units, savings instruments etc. Their investment rights are divided into repatriable and nonrepatriable basis.
Similar measures to woo expatriates by other countries have also paid rich rewards. We should not forget that a bigger part of investment in China in early period was made by expatriates from Hong Kong and Singapore. Return of the natives to mainland has propelled Chinese economic growth.
The new policy on FDI connected with NRI and OCI communities comes as the latest step for attracting more investment into the country. Earlier, a group of measures including that on increasing FDI ceiling defence and insurance shows serious reform measures in the FDI front.