New Delhi:
In order to encourage more overseas investments into India, the government has set up a committee to look into the possibility of treating non-repatriable NRI funds as domestic investment.
"The Committee will look into streamlining the process for NRI investments into India in the light of the Mayaram panel report on rationalising the FDI/FII definition," an official told PTI.
The Committee to be headed by Finance Secretary Arvind Mayaram will include representatives from the ministries of industry, law and external affairs.
Among other things, it will also look at strengthening the reporting system of such investments by the non-resident Indians.
In June, the Mayaram panel had suggested the definitions for foreign direct investment (FDI) and foreign institutional investors (FIIs), but had suggested that the issue related to NRI investment should be looked into separately.
The official said the government now wants to channelise the funds of NRIs, who now have set up large businesses abroad, by treating non-repatriable investments by NRIs as domestic investment.
NRI is defined as a person who is residing outside India, but has Indian citizenship.
"NRIs may prefer investing through corporate entities now," the official said, adding that the option would be looked into.
The government had earlier allowed a vehicle called Overseas Corporate Bodies for NRI investments, but it was later derecognised in late 2003 because of various reasons.
"With suitable safeguards and checks, this can be revived in a different form and NRI investments enhanced," the Mayaram committee had suggested.
Among other things, the Mayaram panel had suggested that foreign investment of over 10 per cent in a listed company be treated as FDI. For unlisted company, all foreign investment should be treated as FDI.
The recommendations aim at removing ambiguities over clear demarcation between FDI and FII.