Acquisition and Transfer of Immovable Property in India

(GSR 407(E) dated 3rd May, 2000)
Under the provisions of the Act, or rules or regulations made thereunder, acquisition or transfer of immovable property in India by a person including an Indian citizen resident outside India would require approval of Reserve Bank.

In terms of section 6(5) of the Act, a person resident outside India can hold, own or transfer immovable property in India if such property was acquired by him when he was resident in India or inherited from a person resident in India.

An Indian citizen resident outside India is permitted to

• acquire any immovable property in India other than agricultural land/farm house/plantation property;
• transfer any immovable property in India to a person resident in India; and
• transfer any immovable property other than agricultural land or plantation property or a farm
• house to an Indian citizen or a person of Indian origin resident outside India.

A person of Indian origin resident outside India has been permitted to

• acquire immovable property in India other than agricultural land/plantation property or a farm house by way of purchase subject to the conditions mentioned in clause (a) of the Regulation;

• acquire any immovable property in India other than agricultural land/plantation property or a farm house in India by way of gift from an Indian citizen resident outside India or from a PIO;

• acquire immovable property in India by inheritance subject to the conditions stipulated in clause © of the Regulation;

• transfer by way of sale any immovable property in India other than agricultural land/plantation property or a farm house by way of sale to a person resident in India;

• transfer agricultural land/plantation property or a farm house by way of gift or sale to an Indian citizen resident in India.

• transfer residential or commercial property in India by way of gift to a

person resident in India or a Indian citizen resident outside India or a PIO resident outside India.

A branch or office in India of a foreign entity other than liaison office has been permitted to acquire immovable property, which is necessary for, or incidental to the activity carried on in India by such branch or office subject to the terms or conditions mentioned in Regulation 5. Such property can also be mortgaged to an authorised dealer as a security for any borrowing by a branch or office.

Authorised dealers have been permitted to allow remittance of sale proceeds of property other than agricultural land/plantation property or a farm house to an Indian citizen resident outside India or PIO as defined in clause © of Regulation . 2 who has sold the property in India subject to the terms & conditions stipulated in Regulation 6.

A person who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan requires approval of Reserve Bank for acquisition or transfer of property in India other than lease not exceeding 5 years, in terms of Regulation 7.

Establishment in India of a Branch or Office or Other Place of Business

(GSR. 408(E) dated 3rd May, 2000 )
Establishment of a branch or liaison office or project office or any other place of business in India by any entity resident outside India other than a banking company requires approval of Reserve Bank of India. The application for permission should be made to Reserve Bank, Central Office, Mumbai in Form FNC 1.

A banking company registered or incorporated outside India is permitted to open a branch or office in India if it has obtained necessary permission under the Banking Regulation Act, 1949.

Permissible activities which can be undertaken by a branch or a liaison office have been specified in the schedules annexed to these Regulations. A project or site office is permitted to undertake activities relating and incidental to execution of project in India.

Authorized dealers have been permitted to allow remittance of profit by a branch and remittance of surplus after completion of the project by the project office subject to terms and conditions specified in Regulation 7.

For details see "Setting up business activities in India - Alternatives available to Foreign Companies".

Investment in Firm or Proprietary Concern in India

(GSR. 410(E) dated 3rd May, 2000)
These regulations provide that except as otherwise provided in the Act or rules or regulations made or directions or orders issued thereunder, any investment by way of contribution to the capital of a firm or proprietary concern or association of persons in India by a person resident outside India requires prior approval of Reserve Bank.

Reserve Bank has granted general permission to an Indian citizen or a PIO (Person of Indian Origin as defined in Regulation 2-vi), resident outside India to make investment by way of contribution to the capital of a firm or a proprietary concern in India on non-repatriation basis subject to conditions mentioned in Regulation 4.

General permission has also been granted to a firm or proprietary concern to make payment in rupees to or for credit of the non-resident Indian or a PIO, the amount invested in the said firm/concern and income accruing on such investment by way of profit of such person.

There is no change in the regulations as existed under FERA regulations governing such investment by NRIs/PIOs in a firm/ proprietary concern on non-repatriation basis.