Can NRIs Buy Agricultural Land in India?

Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) often explore investment opportunities in Indian real estate, but there are restrictions when it comes to agricultural land. Unlike residential or commercial properties, agricultural land, farmhouses, and plantation properties have different rules under Indian law.

This blog explains the legal framework, restrictions, and alternative options for NRIs interested in agricultural land in India.

Legal Restrictions on NRIs Buying Agricultural Land

According to the Foreign Exchange Management Act (FEMA), 1999, NRIs and PIOs cannot purchase agricultural land, farmhouses, or plantation properties in India. can nri buy agricultural land in india​? The Reserve Bank of India (RBI) has set strict regulations preventing overseas Indians from acquiring such properties for investment or personal use.

Why Are These Restrictions in Place?

The Indian government aims to preserve agricultural land for farmers and Indian residents involved in farming activities. This policy prevents NRIs from purchasing farmland directly, ensuring that agricultural resources remain accessible to local farmers.

Exceptions for NRIs

Although NRIs cannot directly purchase agricultural land, there are some exceptions:

• Inheritance – If an NRI inherits agricultural land from their parents, grandparents, or relatives under Indian succession laws, they can legally own it.
• Gift from Resident Indian – An NRI can receive agricultural land as a gift from a resident Indian who is a relative, as per the definition in FEMA regulations.
• Special Permission from RBI – In rare cases, NRIs can apply to the RBI for permission to acquire agricultural land, but approvals are granted selectively.

Alternative Options for NRIs

While direct purchase is restricted, NRIs can still explore investment opportunities in the agricultural sector:

1. Investing Through an Indian Entity

NRIs can invest in Indian companies that own agricultural land, such as agri-based businesses, food processing units, and contract farming ventures.

2. Leasing Agricultural Land

Some state governments allow leasing of agricultural land for farming and related activities. NRIs can lease land through registered Indian businesses engaged in agriculture.

3. Residential & Commercial Property Investments

Since there are no restrictions on NRIs buying residential and commercial properties, they can invest in these sectors for rental income and capital appreciation.

Consequences of Violating the Law

If an NRI wrongly purchases agricultural land, the RBI may:

• Order the sale of the land
• Impose fines or penalties
• Initiate legal action under FEMA regulations

To avoid legal issues, NRIs should always verify property documents and consult legal experts before making any land-related transactions.

Conclusion

NRIs cannot buy agricultural land in India unless they inherit or receive it as a gift. However, they can invest in Indian agricultural businesses or lease farmland through registered entities. For safe and legal property transactions, NRIs should seek professional guidance and ensure compliance with RBI and FEMA regulations.

For expert advice on NRI property transactions, taxation, and compliance, consult Dinesh Aarjav & Associates, a trusted name in NRI financial services.