With favorable interest rates on deposits of non-resident Indians
(NRIs) the government is expecting a jump in NRI remittances and
investment in infrastructure sector.
The state governments are taking specific measures to attract
NRI investment in priority areas, especially the infrastructure
sector. Andhra Pradesh, Maharashtra, Kerala and Tamil Nadu, along
with Punjab have attracted huge NRI investment. Andhra Pradesh
is now receiving the highest amount of money remitted by NRIs
to India, followed by Maharashtra.
Many NRIs have submitted proposals to invest in India, especially
in IT, real estate, telecom, and electrical equipment, pharmaceutical
and other sectors. A lot of NRI funds are coming to India from
the US and Gulf NRIs who are the most active participants. Small
and medium NRI businesses also have made significant investments.
The government has plans to set up separate cells to attract NRI
investment or NRI FDI.
FDI's share in domestic real estate market is higher than levels
achieved in the previous years. The growing interest of global
real estate players in the Indian real estate market and increasing
demand for office space in IT & BPO are aiding this.
NRI investments in real estate have been simplified to encourage
the inflow of funds. The Government of India has put in place
a liberal and transparent policy for investment from overseas
Indians. Most of the sectors are open to Foreign Direct Investment
(FDI) under the automatic route.
Several measures have been taken by the RBI. NRIs can invest,
transfer, give and inherit immovable property. NRIs holding Indian
passports and persons of Indian origin (PIOs) enjoy parity of
status. The RBI has granted general permission to person resident
outside India holding Indian passports and PIOs to buy residential
and commercial properties in India.
Housing finance companies and banks have been permitted to offer
NRI home loans and also to PIOs. For repatriation, NRIs do not
have to go through a circuitous route. They can approach authorized
dealers of foreign exchange without going through the RBI. The
rental income obtained from investment in Indian real estate can
also be repatriated every year.
Both NRIs and PIOs can invest in limited companies engaged in
real estate development. The paid-up value of shares/ convertible
debentures purchased by an NRI, on both repatriation and non-repatriation
basis have a limit of five per cent of the paid-up capital/paid-up
value of each series of debentures. The aggregate paid-up value
of shares/convertible debentures purchased by all NRIs can be
raised to 24% of the paid-up capital of the company/paid-up value
of series of debentures.
Sale proceeds of immovable property, acquired even out of rupee
funds, can now be repatriated if the property has been held for
a minimum of 10 years. There is no lock-in period with regard
to immovable property that is inherited. . The repatriation in
the case of residential properties is restricted to a maximum
of two properties
NRIs can get home loans and repay it through inward remittance
using normal banking channels or by debit to his NRE/FCNR(B)/NRO
account or out of rental income derived from renting out such
property. Repayment of loan in foreign exchange is treated as
equivalent to foreign exchange received for purchase of residential
property.
NRIs are allowed to transfer as gift any residential/commercial
property in India to a person resident in India or to an NRI or
PIO. The sale proceeds of the property received as gift will be
credited only to the NRO account. NRIs who acquired immovable
property while they were resident in India can continue to hold
or transfer such immovable property. There is no lock-in period
for sale of residential/commercial property. NRIs can remit abroad
up to $1 million per year from the sale of immovable property
in India.
Foreign Direct Investment is encouraged and permitted, subject
to certain conditions, in the following real estate sectors in
India. It includes hotel development, tourism, hospitality, hospitals,
and resorts township development, development of commercial real
estate, built-up infrastructure, housing and construction projects,
housing and construction projects, building educational institutes,
building recreational facilities, infrastructure projects at both
regional and local level and Special Economic Zones.
