1. Can a foreigner invest in India?
Yes, a foreigner can invest in India if he adheres to
following guidelines:
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In case of development of serviced housing plots, the minimum land area has been
reduced to 25 acres from 100
acres
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For construction-development projects, a minimum built-up area of 50,000 sq. mtrs.
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In case of a combination project, any one of the above two conditions would suffice
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Minimum capitalization of US$ 10 million for wholly owned subsidiaries & US$ 5 million
for joint ventures with
Indian partners
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Original investment cannot be repatriated before a period of 3 years from completion
of minimum capitalization.
Investor may be permitted to exit earlier with prior Government
approval. However Investor not permitted to sell
undeveloped plots.
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A foreigner is not allowed to invest in Plantations & Agricultural Land in India.
Investments are possible in
Townships, Residential developments, Retail malls, Commercial
office spaces & IT parks, Hotels & Leisure resorts
etc. in the form of development. They can also invest in
ready hotels and in units in notified IT/Industrial parks as
they fall under infrastructure status.
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2. Where is FDI in India permitted?
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The following are the sectors where foreign developers are allowed to invest and
where FDI is permitted up to 100% through the automatic route: Infrastructure such
as roads and highways, ports and harbors, electricity generation transmission and
distribution, mass rapid transit systems, LNG Projects, Hotels and tourism, Hospitals,
Private oil refineries Venture capital funds/companies and setting up/development
of industrial park/model town/SEZ.
Post March 2005, the Government of India has decided to allow FDI under the automatic
route in the construction - development sector. Though foreign direct investment
was already permitted in this sector, it had to be routed, until now, through the
Foreign Investment Promotion Board (FIPB).
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3. Can an NRI invest in property in India? If so, How
many?
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There is no restriction on number of residential/commercial property that
NRI/PIO can purchase under the general permission available.
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4. Can an NRI let out a property that he has invested
in?
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Yes, However, the rent received, being current income may be credited
to NRO/NRE account or remitted abroad.
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5. Can an NRI invest in only residential property or
even commercial property and land?
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NRIs can invest in all properties other than agricultural, plantation property
and farmhouses without the permission of RBI. In order to invest in agricultural,
plantation property and farmhouses a NRI would need a prior approval from the RBI.
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6. Can OCBs invest in property in India?
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OCBs can invest in all commercial properties other than agricultural and
plantation property only after prior approval by RBI. However RBI does not recognize
OCBs as a class of investor effective September 2004. But they can invest after
obtaining a prior approval from RBI.
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7. What are repatriation norms? Can he repatriate the
rentals or even the principal amount invested? Is
there a lock-in period?
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The income generated from property is freely repatriable outside India.
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NRI/PIO/OCB may repatriate the sale proceeds of residential/commercial property
in India acquired by way of
inward remittance through normal banking channel or by debit
to NRE/FCNR (B) account.
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However, the amount to be repatriated should not exceed (a) in foreign exchange
received through normal
banking channel or by debit to FCNR (B) account or (b) the
foreign currency equivalent, as on the date of
payment, of the amount paid by debit to NRE account.
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The sale proceeds of residential/commercial property in India acquired by way of
debit to NRO account cannot be
repatriated and should be credited to NRO account only.
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No lock in period is applicable for sale/mortgage/gift of any property. Conversely,
if the person was resident
in India and had purchased the property out of his rupee
funds during his/her stay then for sale proceeds to
remitted abroad he should have held the property for not
less than ten years or the funds must have been parked
in NRO account for the interim period between ten years
and the years for which the property was held.
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8. Is there any restriction on repatriation of sale proceeds
of residential property purchased by NRI/PIO/OCB
out of funds remitted to India through normal banking channel
or funds held in his NRE/FCNR (B) account?
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Yes. Repatriation of sale proceeds is restricted to not more than two residential
properties.
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9. What are the modes of payment that can be used by
NRI/PIO/OCB to invest in immovable property in
India?
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The purchase of any immovable property by the NRI/PIO/OCBs has to be made from inward
remittances in foreign exchange through normal banking channels or from FCNR/NRE/NRO
accounts maintained with banks in India.
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10. Can an NRI/PIO sell/mortgage/gift their property
to a resident citizen or NRI or PIO?
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NRIs can sell/mortgage/gift their property to a resident citizen or NRI or PIO.
PIOs/OCBs can only mortgage/gift their property to resident citizens or NRI or PIO
but can sell it only to a resident citizen. However, with prior approval from the
RBI, PIOs can sell their properties to NRIs and other PIOs.
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11. What Legal Procedures an NRI/PIO/OCB have to comply
with while investing in Property in India?
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NRIs/PIO/OCBs had to file declaration form IPI 7 with the RBI within 90 days of
purchase of immovable property (except residential property) and on final payment
of consideration, a certificate evidencing such a transaction and bank certificate
regarding the consideration paid has to be submitted.
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