Important FEMA rules for NRIs investing into Indian Real Estate.

By Abhay Harish Shah, Realty Quarter

In the Indian real estate market, Non-Resident Indians (NRIs) are an important investment segment. NRI’s generally purchase properties for investment purposes or for retirement purposes from their emotional connection with their country. India has emerged for international capital as a lucrative location. “Overseas Investments have increased by 137% from 3.2 billion dollars in 2011-2013 to 7.6 billion dollars in 2014-2016. A survey shows that almost 30% of the total global real estate transaction in India will be cross-border.”

Important FEMA rules NRIs have to take into consideration:

The Reserve Bank of India has simplified the rules for NRI investments in order to attract more foreign investment. The Foreign Exchange Management Act (FEMA) governs property transactions.

As defined by FEMA, any immovable property in India, other than agricultural land/plantation property/farm house can be obtained by an NRI or Person of Indian Origin (PIO). This was granted by the government of India under a general authorization. However, without the permission of the Reserve Bank, no person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan shall acquire or transfer immovable property in India, other than lease, that too not exceeding five years.

An NRI may invest in residential as well as commercial properties in India. However, an NRI can own any agricultural land, farmhouse and plantation property, only if it is inherited or gifted to the NRI.