The new plan is part of the Make In India programme
India approved a plan on Wednesday (August 31) to allow foreign investors to settle, emulating a policy in countries such as the United States and Singapore to woo investment from abroad.
The proposal, aimed at giving a fillip to prime minister Narendra Modi’s ‘Make in India’ programme, was first announced in February’s federal budget.
Foreigners need to invest Rs 100 million (£1.14m) over 18 months, or Rs 250 million over three years, resulting in jobs for at least 20 resident Indians every fiscal year to be allowed to settle, the government said in a statement.
Those who meet the criteria would be eligible to stay for 10 years. The residency permit can be extended by a decade.
Up until now, such investors have been eligible for business visas lasting up to five years.
The cabinet approval comes months after the government unveiled sweeping reforms to rules on foreign direct investment, clearing the way for multinationals such as Apple to open stores and announcing easier terms for investors in sectors ranging from civil aviation to pharmaceuticals.
Modi has urged global businesses to come and manufacture in India since he took office two years ago.
His government has pointed to a 23 per cent rise in foreign direct investment to $55.5 billion (£42.3bn) in the fiscal year to March as proof the policies are gaining traction.
Investors with the permanent residency status would be free to buy one home, and spouses and dependents would be allowed to take private jobs and study, the government said.