India is aspiring to compete with the likes of Singapore and Hong Kong for foreign entrepreneurs by offering residence in return for investment, according to people with knowledge of the matter.
The Cabinet on Wednesday approved a plan that allows overseas citizens to settle if they plough enough money into the $2 trillion economy, government spokesman Frank Noronha said in New Delhi, without providing further details.
Foreigners investing 100 million rupees ($1.5 million) over 18 months, or 250 million rupees over three years, would be eligible to live in India for 10 years under a home ministry proposal, the people said, asking not to be identified as the details aren't public. The so-called permanent residency status could be extended by another decade providing certain conditions are met, they said.
Prime Minister Narendra Modi is trying to capitalize on India's position as the fastest-growing big economy to woo investment, particularly in manufacturing to create jobs for the poor. The challenge lies in convincing entrepreneurs to embrace a nation with byzantine rules, dirty air and infrastructure snarls -- such as the one that emboxed U.S. Secretary of State John Kerry's convoy in a two-hour traffic jam during an official visit to New Delhi on Monday.
Investors coming from overseas would be allowed to buy one residential property, and spouses and children would be able to work or study, the people said. Nationals of long-time rival Pakistan, or other citizens of Pakistani origin, would be blocked from the program, they said.
"It's an indication of more broad-mindedness towards foreign investors -- it'll be easier for them to come to India," said Mohan Guruswamy, a former Indian finance ministry official and chairman at the Centre for Policy Alternatives in New Delhi. At the same time, investors looking to settle somewhere would likely look for other destinations such as Canada, he said.
Finance Minister Arun Jaitley unveiled the proposal for long-term residency in February, without providing more details. Currently investors get business visas lasting up to five years, according to the text of his budget speech.
Foreign direct investment into India climbed 23 percent to $55 billion in the 12 months through March 2016, buoyed by Modi's steps to ease curbs on inflows. Entrepreneurs would still have to adhere to detailed rules governing participation in everything from defense to e-commerce.
India's gross domestic product probably rose 7.6 percent in the three months through June, according to the median of 36 estimates in a Bloomberg News survey ahead of a report later Wednesday.
India ranks 130 of 189 economies in the World Bank's Ease of Doing Business index for 2016. That's up four places from a year ago but still much lower than Asian centers such as Singapore and Hong Kong, which have long offered investor visa options.
The home ministry intends to take its proposal to the Cabinet for approval after completing consultations with other departments, the people said. Ministry spokesman K. S. Dhatwalia said talks are ongoing, without specifying further.