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India unveils a US$1.5 million investor visa to spur expansion

[NEW DELHI] India is aspiring to compete with the likes of Singapore and Hong Kong for foreign entrepreneurs by offering residence in return for investment.

Foreigners investing 100 million rupees (S$2.0 million) over 18 months, or 250 million rupees over three years, would be eligible to live in India for 10 years, the government said in a statement in New Delhi on Wednesday. This so-called permanent residency status could be extended by another decade providing certain conditions are met.

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 US 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, according to the statement. The money brought in should create at least 20 jobs for resident Indians each financial year.

"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, the text of his budget speech shows.

Foreign direct investment into India climbed 23 per cent to US$55 billion in the 12 months through March 2016, buoyed by Modi's steps to ease curbs on inflows. 

Commerce Minister Nirmala Sitharaman said Tuesday that Asia's No 3 economy will open more sectors to investment from abroad. Even so, entrepreneurs 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 per cent in the three months through June from a year earlier, according to the median of 36 estimates in a Bloomberg News survey ahead of a report later Wednesday.

The nation ranks 130 of 189 economies in the World Bank's Ease of Doing Business indexfor 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.