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posted 8 years ago
The Government of India has approved a scheme for grant of permanent residency
status (PRS) to eligible foreign investors.
The key features of the scheme have been mentioned in the press release issued
by the Government of India (Press
Release) but as the Press Release itself seems to suggest, further changes
to immigration laws and foreign direct investment (FDI) policy will be required to give full effect to the scheme. This
update briefly sets out key features of the scheme.
PRS Scheme: Conditions
As per the Press Release, the scheme will be
applicable to foreign investors fulfilling the prescribed eligibility
conditions, his/her spouse and dependents. To avail the benefits of the PRS
scheme, a foreign investor will be required to invest a minimum of INR 100
million (approx. USD 1.5 million) or INR 250 million (approx. USD 3.75 million)
in a span of 18 months or 36 months, respectively. Additionally, such foreign
investment must lead to employment for at least 20 resident Indians every
financial year.
The Press Release provides that grant of PRS will
be subject to conditions in the FDI policy notified by the Government from time
to time and that suitable provisions will be incorporated in the ‘Visa Manual’
to provide for grant of PRS to foreign investors. Therefore, future amendments
to the Visa Manual and the FDI policy will also be relevant to understand the
full significance and impact of the scheme. Going by the past experience, these
amendments may also be announced in the near future.
PRS Scheme: Benefits
The Press Release envisages grant of PRS for
an initial period of 10 years which can be extended for another 10 years if the
PRS holder does not come to ‘adverse notice’ of the authorities. The meaning of
‘adverse notice’ has not been clarified.
As per the existing law, foreigners entering/staying in India for a period
of more than 180 days in a year are required to register with the authorities.
Moreover, Indian law generally does not envisage grant of visa for more than 5
years. An exception has been made for nationals of United States of America who
can be granted a multiple entry visa for 10 years. The scheme seeks to do away
with these requirements for foreign investors having PRS. The PRS will serve as
a multi entry visa and PRS holders will be allowed multiple entries into India
without any limitation on the stay period and will not be required to register
with the authorities.
As per the existing exchange control regulations, except in certain
specified situations, foreigners are prohibited from acquiring immovable
property in India. The Press Release seeks to relax this requirement. The
foreign investors having PRS will be permitted to purchase one residential
property for dwelling purposes.
The current Indian visa regulations, amongst others, permit employment of
foreigners in India if they are paid more than USD 25,000 as annual salary. Pursuant
to the Press Release, this minimum remuneration requirement will not apply for
spouses and dependents of foreign investors having PRS. This would enable
spouse/dependents of a foreign investor having PRS to reside and work in India
without complying with relatively stricter visa regulations in place for
foreign nationals. The Press Release also permits such spouse/dependents to pursue
education in India.
Way Forward
The announcement seems to follow similar
schemes prevalent in developed countries including France, United Kingdom, and
United States of America. Historically, smaller states like Dominica, St. Kitts
and Nevis, etc. have relied upon these economic residency programs to attract
foreign investments in their respective jurisdictions and a similar liberal
structure in India may also help attract more foreign investment into India. However,
a bigger benefit of the scheme will be if it is able to motivate qualified and
entrepreneurial foreign human capital to come to India. This will then truly
serve as a useful facilitator to the Make in India Programme.
This update was first published on Mondaq.
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