NRI/PIO is a branch of PROI. Hence, an NRI/PIO is a PROI. Since, NRI/PIO name itself contains the word ‘India’, therefore, prima facie it can be said that to qualify as NRI/PIO (under various FEMA Regulations) there should be some Indian connection.
Under various FEMA Regulations, though there is a general restriction on PROI to undertake certain capital account transactions in India, however, there is a relaxation provision for NRIs/PIOs e.g. acquisition of immovable property in India, opening bank account in India, investment in India etc. Various set of provisions within the regulations have been provided for NRI/PIO. Hence, it is significant to understand the definition of NRI/PIO. A separate definition of NRI/PIO has been given in the different FEMA regulations. In simple words, the definitions are as under:
Definition of NRI (‘Non-Resident Indian’): NRI has been defined as a PROI who is Citizen of India. Hence, all PROIs who hold Indian Citizenship will qualify as NRIs and can enjoy the benefits of NRIs given in various FEMA Regulations.
Definition of PIO (‘Person of Indian Origin’): In general, PIO has been defined as a PROI who is Citizen of some other country (i.e. not an Indian Citizen), if (a) he/she held at any time Indian Passport or (b) he/she or either of his/her parents or his/her grandparents was a Citizen of India or (c) the person is spouse of an Indian citizen or person referred in (a) or (b).
However, there is a restriction under various Regulations wrt being a PIO. I.e. certain Countries Citizen cannot be qualified as PIO e.g. Bangladesh and Pakistan Citizens. Further, for the purposes of acquiring/holding immovable property in India, there is a restriction for Citizen of 8 countries i.e. Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, China, Nepal & Bhutan.