India Budget 2021: Will FM gift NRIs with a special package?

India’s finance minister Nirmala Sitharaman has described the upcoming budget as unlike anything seen before. While it’s the first one to go paperless, what’s keeping non-resident Indians (NRIs) in the Arabian Gulf interested are expectations of incentives and sops that’ll allow them to remit more and make long-term investments back home more attractive.

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Special package for NRIs in the Arabian Gulf: “First of all, this budget should address confusion around the residency status in India. Considering the novel coronavirus disease (Covid-19) pandemic, a lot of people who previously used to spend more than 180 days in the Arabian Gulf haven’t been able to do so. Many are in India because of health and safety reasons. The government should take note of this and announce changes to the law accordingly,” says Naveen Sharma, ex-Chairman, ICAI Dubai Chapter.

India has the world’s largest diaspora population in the world with around 18 million living abroad. Of this, more than 3.5m call the UAE their second home. This is the highest concentration of NRIs in any country, surpassing the US and Saudi Arabia. What makes the voice and opinion of NRIs in the UAE important is the fact that they are also among the biggest sources of remittance to India.

Tax experts reckon that giving the NRIs in the Arabian Gulf more choices to invest freely in India will be mutually symbiotic in the current climate.

Allow NRIs to invest more freely: Over the last few months, India has announced good opportunities for companies willing to invest in the manufacturing sector. However, not many NRIs have been able to make good use of these options. “If an NRI wants to open business in India, he or she should be given a period of two years to do so without attracting any change in their residency or tax treatment status. Setting up a business requires capital, time, and creates employment. Such a move would increase the flow of remittances to India further and also create more jobs locally,” added Sharma.

“NRIs can always look for a local partner in India in case they wish to invest in a long-term project. However, yes, there is a case for the government to think on these lines. Residency status or tenure for NRIs should be streamlined as per the investments they are making in the country,” says Sanjay Jain, a chartered accountant (CA) based in India.

Announcing measures such as these could make India more attractive for NRI remittances and investments.

Allow duty-free import of goods to India: The NRI community is also expecting some leniency on customs front. In 2013, the Indian government had banned duty-free import of flat panel TV sets by air travellers. “Protectionist attitude towards the flow of money into India doesn’t help much when countries are competing fiercely to attract foreign investments. I feel, investments and goods of up to $1 million should be allowed in India without any restrictions on customs. Today, we cannot even take a 32-inch television without incurring taxes. This should change,” says Sharma.

The limit of $1 million is not a big one. “Imagine the opportunities it can unfold. There are many NRIs who would want to buy stuff in the UAE and sell it in India. They should be allowed to do so,” adds Sharma.

Increase the limit of outward remittance: The Indian finance minister should also consider raising the limit of outward remittance from India and make the process more user friendly. At a time when liquidity has crunched for businesses and households, NRIs could benefit by accessing their funds in India.

— suneeti@khaleejtimes.com