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[India] Are Foreign Companies Allowed to Buy Land in India?

Author: Ms. Rachi Gupta Edited by Bob Tseng


Foreign companies are allowed to purchase/sell immovable property(other than agricultural land/plantation property/farm house) in India provided:[1]


a. Clearance from the Government of India, Ministry of External Affairs is obtained for such purchase/sale, and

b. The consideration for acquisition of immovable property in India is paid out of funds remitted from abroad through banking channels.


Transactions involving acquisition and transfer of immovable properties outside India by persons resident in India are governed by Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015 which were issued vide Notification No. 7(R) / 2015-RB, dated January 21, 2016. Both these regulations replaced corresponding earlier regulations issued in May 2000. Along with these Regulations, such transactions are also governed by Master Direction No. 12/2015-16 on Acquisition and Transfer of Immovable Property under FEMA, dated January 1, 2016, which consolidates all the instructions and circulars issued by Reserve Bank.


A foreign company which has established a branch office or other place of business in India, in accordance with FERA / FEMA regulations, can acquire any immovable property in India, which is necessary for or incidental to carrying on such activity. The payment for acquiring such a property should be made by way of foreign inward remittance through proper banking channel. A declaration in form IPI should be filed with Reserve Bank of India within ninety (90) days from the date of acquiring the property. Such a property can also be mortgaged with an authorized dealer as a security for other borrowings. On winding up of the business, the sale proceeds of such property can be repatriated only with the prior approval of Reserve Bank of India. Further, acquisition of immovable property by entities that had set up branch offices in India and incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of Reserve Bank of India to acquire such immovable property.[2] However, if the foreign company has established a liaison office, it is not allowed to acquire immovable property. In such cases, liaison offices can take property by way of lease not exceeding five (5) years. Moreover, there are some prohibitions as well in transferring immovable property in India.[3]

[1] As per Regulation 5 of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018 dated March 3, 2018. [2] As per Regulation9 of Foreign Exchange Management(Acquisition and Transferof Immovable Property in India) Regulations, 2018 dated March 3, 2018 [3] As per Regulation 10 Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018 dated March 3, 2018.


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