Introduction:
Remittances from non-resident Indians (NRIs) to their families in India play a significant role in the Indian economy. These remittances are considered as a form of capital inflow and are accounted for in the domestic factor income of India.

Definition of Domestic Factor Income:
Domestic factor income refers to the income earned by the factors of production within a country's borders. It includes wages, salaries, rent, interest, and profits generated from various economic activities.

Inclusion of Remittances in Domestic Factor Income:
Remittances from NRIs to their families in India are considered as a part of the domestic factor income. This is because:

1. Flow of Capital:
Remittances represent a flow of capital from overseas to India. As capital is one of the factors of production, remittances become an integral part of the domestic factor income.

2. Source of Income:
Remittances are earned by NRIs through their employment, business, or investments abroad. This income is then transferred to their families in India. Since the source of this income is the factors of production (e.g., labor, entrepreneurship, capital), it qualifies as domestic factor income.

3. Economic Impact:
Remittances have a direct impact on the domestic economy. They contribute to household consumption, savings, and investment in India, thereby stimulating economic growth. Therefore, including remittances in the domestic factor income helps in accurately assessing the overall economic activity and measuring the country's gross domestic product (GDP).

4. National Income Accounting:
In national income accounting, remittances are considered as a part of the current transfers category. Current transfers include flows of resources that do not involve any quid pro quo. Since remittances are transfers of money without any corresponding goods or services, they are accounted for in the domestic factor income.

Conclusion:
Remittances from NRIs to their families in India are included in the domestic factor income of India. These remittances represent a flow of capital, are sourced from the factors of production, have a significant economic impact, and are accounted for in national income accounting. Understanding and accurately accounting for these remittances is crucial for assessing the overall economic activity and measuring India's GDP.