Introduction
Obtaining U.S. citizenship is a significant life event that often involves years of careful planning and a lengthy process, often many years. While U.S. citizenship offers important benefits to Indian nationals such as the right to live and work permanently in the U.S., access to government services, and passports that permit visa-free travel to many countries, there are serious legal and social factors to consider as India does not permit dual citizenship. Many Indian nationals thus find themselves forced to choose between the advantages of obtaining U.S. citizenship and the legal separation this entails from their home country.
Consequently, the government of India introduced its Overseas Citizenship of India (OCI) program in August 2005 to address the needs of diasporic Indians and offer them benefits to live and work in India indefinitely without, however, permitting full citizenship.1 This article explores the OCI program and the consequences for Indians who decide to renounce their citizenship.
The Concept of Overseas Citizenship of India (OCI)
An Overseas Citizen of India (OCI) is a person of Indian origin who is a citizen of another country registered as an OCI cardholder under 7A of the Citizenship Act of 1955. According to the Ministry's webpage: "A registered Overseas Citizen of India is granted multiple entry, multi-purpose, life-long visa for visiting India, he/she is exempted from registration with Foreign Regional Registration Officer or Foreign Registration Officer for any length of stay in India, and is entitled to general 'parity with Non-Resident Indians in respect of all facilities available to them in economic, financial and educational fields except in matters relating to the acquisition of Agricultural land or Farm house or Plantation properties."2
Eligibility for OCI
OCI status is available to individuals who were originally Indian citizens or are descendants of Indian nationals. It is open to those who have renounced Indian citizenship and are nationals of another country, except for citizens of Pakistan and Bangladesh, who are ineligible. Those holding U.S. citizenship, or citizenship from other countries of Indian origin, can apply for OCI.
Children of OCI cardholders may also receive OCI status. A parent would apply for minor children. Adult U.S. citizens children of OCI cardholders and Indian nationals would apply on their own.
Benefits of OCI
The OCI card provides several significant benefits for former Indian nationals or their descendants, including:
- No Requirement to Renounce Foreign Citizenship: The most appealing aspect of OCI is that it allows individuals to maintain their foreign citizenship (including U.S. citizenship) while enjoying many of the rights granted to Indian citizens. This is in contrast to the situation faced by Indian nationals who acquire U.S. citizenship and must renounce their Indian citizenship.
- Multiple Entry, Multi-Purpose Visa: The OCI holder enjoys a lifelong visa for travel to India. The visa grants the individual unrestricted access to visit India, and for staying for extended periods without needing to renew a visa.
- Employment Rights: OCI holders are permitted to work indefinitely and without the need of a work permit in India except for certain positions in government or military services that require Indian citizenship.
- Educational Benefits: OCI holders can avail themselves of the same educational privileges as Indian citizens including admission to certain colleges and institutions.
- Financial Benefit: OCI holders are allowed to maintain bank accounts and invest in various opportunities.
- Property Ownership: OCI holders are allowed to buy property in India except Agricultural land or Farmhouse or Plantation properties unlike foreign nationals who do not have this right.
Differences Between U.S. Citizenship and OCI
The distinction between U.S. citizenship and OCI lies in the concept of nationality. U.S. citizenship confers the full rights and responsibilities of a national of the United States, including political rights like voting and the ability to hold elected office. However, this also means renouncing Indian citizenship and potentially losing rights to property and benefits in India.
In contrast, OCI offers a middle ground, allowing individuals of Indian origin to retain their foreign citizenship while enjoying specific rights and privileges in India. OCI holders do not have full citizenship rights in India, but they can live, work, and invest in the country without relinquishing their foreign nationality.
OCI cardholders are treated similarly to Non-Resident Indians (NRIs) when it comes to economic activities like business ownership, investment, and opening bank accounts whereas U.S. citizens without OCI status face certain limitations / restrictions.
Consequences of Obtaining U.S. Citizenship for Indian Nationals
Loss of Indian Citizenship
Renouncing Indian citizenship has various personal and legal ramifications. Indian nationals who obtain U.S. citizenship are required to surrender their Indian passport and apply for a renunciation certificate. The process involves paying a fee and formally declaring the renunciation of Indian citizenship to the Ministry of Home Affairs.
In 2023, over 216,000 Indians renounced their citizenship. This was a decline from the previous year which recorded the highest number of relinquished passports. The number of people giving up their Indian citizenship has significantly increased since 2019.3
Limited Political Rights
OCI holders cannot vote in Indian elections or run for office. OCI status also does not allow holders to work in government jobs in India.
Loss of Property Ownership Rights
In some states in India, laws restrict non-citizens from purchasing agricultural land or property. Therefore, an Indian national who acquires U.S. citizenship might lose the right to purchase certain types of property under certain circumstances, as the Indian government may consider them a foreign national post-renunciation. When selling the Indian property belonging to an NRI (Non-Resident Indian), it is subject to TDS (Tax Deducted at Source) which is different than as taxed to resident Indians.4 Overall, there are different tax implications from a property capital gains standpoint as to how the income is treated between these two countries.
Impact on Social Security Benefits and Pensions
Indian nationals who obtain U.S. citizenship may lose their eligibility for certain Indian government benefits, such as government sponsored pensions, medical insurance, and other welfare programs meant for Indian citizens. U.S. citizens residing in India may also face restrictions on accessing some Social Security benefits unless they meet specific residency program eligibility criteria. Dependents and survivors of such U.S. citizens also have certain eligibility considerations.5
Immigration and Visa Considerations
U.S. citizenship may ease the travel and visa process for those wishing to visit the U.S. or certain other countries, but it can complicate matters for travel back to India. Unless the person is an OCI cardholder, former Indian nationals must apply for a visa (tourist, business, long-term ...) to enter India, rather than being able to travel to and from freely with an Indian passport.
Conclusion
The decision to acquire U.S. citizenship has significant legal and personal considerations for Indian nationals, particularly the loss of Indian citizenship and the potential impact on property, taxes, and social benefits. However, the Overseas Citizenship of India scheme offers an alternative for individuals who wish to retain ties to India without relinquishing their foreign citizenship. Understanding the complexities of both U.S. citizenship and OCI can help Indian nationals make informed decisions that align with their long-term goals, balancing the benefits of U.S. citizenship with the desire to maintain a connection to India.
Footnotes
1. The Government of India's OCI can be found at: Government of India, Ministry of External Affairs: MEA | Overseas Citizenship of India Scheme
2. Government of India, Ministry of External Affairs: MEA | Overseas Citizenship of India Scheme. Recently, the Government of India reaffirmed the provisions of OCI after false news reports claimed that the government had curtailed some OCI privileges. See "No changes to Overseas Citizenship of India rules, says External Affairs ministry arm," New Indian Express, September 28, 2024: No changes to Overseas Citizenship of India rules, says External Affairs ministry arm; and The Gazette of India, Part II, Section 3, Sub-Section ii, March 4, 2021: https://www.mha.gov.in/sites/default/files/Notification_19032021.pdf
3. According to the website, Statista, Indian nationals renouncing their citizenship leaped from 144 million in 2019 to 225 million in 2022. This number declined somewhat in 2023 to 216.2 million, but this figure was still higher than the pre-COVID trend line which saw the number of renunciations only gradually increase from 122 million in 2011 to 144 million in 2019. See Statisa, "Number of people renouncing Indian citizenship form 2011 to 2023": India: number of people renouncing citizenship 2022 | Statista
4. The official text can be found at Government of India, Ministry of External Affairs, "Acquisition and transfer of immovable property in India": Microsoft Word - Acquisition and transfer of Immovable property in India.doc
5. https://www.ssa.gov/pubs/EN-05-10137.pdf
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