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.
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.
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