NRI Investment in India: Rules, Routes and Repatriation
An NRI (Non-Resident Indian) can invest in Indian companies (as FDI or portfolio investment), real estate (residential and commercial, but not agricultural land/farmhouses/plantations), and mutual funds/securities, under FEMA's NRI investment framework — routed through an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) bank account depending on whether full repatriation is intended.
NRE vs NRO account — which to use
| Factor | NRE Account | NRO Account |
|---|---|---|
| Source of funds | Foreign income remitted to India | Income earned in India (rent, dividends) |
| Repatriability | Fully repatriable (principal + interest) | Repatriable up to $1 million/year after tax |
| Taxability of interest | Tax-free in India | Taxable in India (TDS applies) |
Investing in a company
NRIs can invest in Indian companies' equity on a repatriation basis (through NRE, subject to FDI/FPI sectoral limits) or non-repatriation basis (through NRO, generally treated at par with resident investment and not subject to FDI caps) — the non-repatriation route offers more flexibility since it isn't counted against sectoral FDI limits.
Real estate investment rules
NRIs can freely purchase residential and commercial property in India (payment must come through normal banking channels — NRE/NRO/FCNR accounts), but cannot purchase agricultural land, plantation property, or farmhouses, except by inheritance or gift.
Repatriating sale proceeds
Repatriation of property sale proceeds is capped at $1 million per financial year (inclusive of all other eligible remittances from NRO accounts), subject to payment of applicable taxes and a Chartered Accountant's certificate (Form 15CB) confirming tax compliance.
Planning NRI investment into India? Our FEMA advisory team structures the investment route and repatriation plan.