Non-Resident Indians (NRIs) often seek investment opportunities in India, particularly in real estate. However, one of the most frequently asked questions is: Can NRI buy agricultural land in India? The answer is largely governed by the Foreign Exchange Management Act (FEMA) and the Reserve Bank of India (RBI) regulations, which impose strict restrictions on NRIs purchasing agricultural land, plantation property, or farmhouses.

Legal Restrictions on Agricultural Land Purchase

According to the FEMA Act, 1999, NRIs and Overseas Citizens of India (OCIs) are not allowed to purchase agricultural land, plantations, or farmhouses in India. can nri buy agricultural land in india​? This rule is in place to ensure that agricultural land remains with local farmers and is used for its intended purpose. The restriction applies even if an NRI wants to use the land for personal farming or non-commercial purposes.

However, there are specific circumstances under which an NRI can acquire agricultural land:

1. Through Inheritance: If an NRI inherits agricultural land from parents, grandparents, or other relatives who were Indian residents, they can legally own the land.

2. Through Gift: An NRI can receive agricultural land as a gift from a relative who is an Indian citizen and legally owns the land.

3. With Special Permission from RBI: In exceptional cases, the RBI may grant permission for an NRI to acquire agricultural land if it is deemed necessary for a legitimate reason.

Why Are NRIs Restricted from Buying Agricultural Land?

The Indian government has imposed these restrictions for several reasons:

• Preservation of Agricultural Land: To ensure that agricultural land remains available for farming and does not get converted into commercial or residential property.

• Preventing Speculative Investments: If NRIs were allowed to buy agricultural land freely, it could lead to price speculation and make land unaffordable for local farmers.

• Avoiding Unauthorized Land Use: Many states have specific land laws that prohibit non-agriculturists from buying agricultural land.

Alternative Investment Options for NRIs in Agriculture

Since direct purchase of agricultural land is not allowed, NRIs can explore alternative investment options:

1. Leasing Agricultural Land – Instead of purchasing, NRIs can lease agricultural land for farming, agribusiness, or allied activities.

2. Investing in Agribusiness Companies – NRIs can invest in companies engaged in farming, food processing, or agricultural exports.

3. Partnership with Indian Residents – NRIs can enter into joint ventures with Indian citizens who own agricultural land.

4. Investing in Agricultural Infrastructure – NRIs can invest in warehouses, cold storage facilities, and other agricultural infrastructure projects.

State-Specific Rules on Agricultural Land Ownership

In addition to FEMA and RBI regulations, some Indian states have their own laws regarding agricultural land ownership. For example:

• Maharashtra, Gujarat, and Karnataka: Only farmers can buy agricultural land.

• Punjab and Rajasthan: More relaxed rules, but still require proof of agricultural background.

• Kerala and West Bengal: Comparatively lenient regulations on land ownership.

NRIs should check specific state laws before making any investment plans related to agricultural land.

Consequences of Violating Land Purchase Rules

If an NRI purchases agricultural land in violation of FEMA and RBI regulations, the consequences can be serious:

• The transaction may be declared null and void.

• The government has the right to confiscate the land.

• The NRI may be subject to penalties and legal action.

How Can NRIs Sell Inherited Agricultural Land?

If an NRI inherits agricultural land, they can legally own it but may face restrictions on selling it. Generally:

• The land can be sold only to an Indian resident who is eligible to own agricultural land.

• Some states may have additional conditions on selling inherited land.

• NRIs should consult a legal expert before selling inherited agricultural land.

Conclusion

So, can NRI buy agricultural land in India? The answer remains a clear no, except under inheritance or special permission scenarios. NRIs looking to invest in agriculture can explore alternative options such as agribusiness investments, leasing land, or forming partnerships with Indian residents. Given the complexities of Indian land laws, NRIs should seek legal guidance before making any land-related decisions.

For expert assistance on NRI property regulations, Dinesh Aarjav & Associates provides professional advisory services to ensure compliance with Indian laws.