Can NRIs Buy Agricultural Land in India?

Many Non-Resident Indians (NRIs) are interested in investing in Indian real estate, but buying agricultural land comes with restrictions. While NRIs can easily purchase residential and commercial properties, agricultural land, plantation land, and farmhouses fall under different legal regulations.

This blog explains whether NRIs can buy agricultural land in India, the legal restrictions, and available alternatives.

Legal Restrictions on NRIs Buying Agricultural Land

Under the Foreign Exchange Management Act (FEMA), 1999, NRIs cannot purchase agricultural land, farmhouses, or plantations in India. The Reserve Bank of India (RBI) strictly regulates such transactions to protect farmland for Indian farmers.

Key Points on NRI Restrictions

• NRIs cannot buy agricultural land directly.
• There is no special permission granted for such purchases.
• Even if an NRI wants to engage in farming, buying farmland is not allowed under FEMA.

When Can an NRI Own Agricultural Land?

Although direct purchase is restricted, can nri buy agricultural land in india​, NRIs can still own agricultural land in specific cases:

1. Inheriting Agricultural Land

If an NRI inherits agricultural land from their parents, grandparents, or other family members, they can legally own it. However, they cannot sell it to another NRI—only to an eligible Indian resident.

2. Receiving Agricultural Land as a Gift

An NRI can receive agricultural land as a gift from a resident Indian who is a relative under FEMA’s definition. However, the land must have been legally owned by the person gifting it.

3. Special Permission from RBI

In rare cases, an NRI can apply to the RBI for special approval, but such approvals are seldom granted.

Alternative Investment Options for NRIs

Since direct purchase is not possible, NRIs looking to invest in Indian agriculture can explore alternative methods:

1. Investing in Agricultural Businesses

NRIs can invest in Indian companies engaged in agribusiness, food processing, and organic farming. These businesses often own agricultural land and offer profit-sharing opportunities.

2. Leasing Agricultural Land

Some Indian states allow companies to lease agricultural land for contract farming or other approved agricultural activities. NRIs can invest through an Indian company that leases farmland.

3. Purchasing Residential & Commercial Properties

NRIs face no restrictions when buying apartments, houses, or commercial properties. Investing in real estate projects near agricultural hubs can be an alternative way to benefit from the agricultural economy.

Consequences of Illegal Purchase

If an NRI wrongly purchases agricultural land, the following actions can be taken:

• Forced sale of the land as per RBI directions.
• Financial penalties under FEMA regulations.
• Legal action, which can result in fines or seizure of assets.

To avoid legal troubles, NRIs should consult legal and financial experts before engaging in any property transactions involving agricultural land.

Conclusion

NRIs cannot buy agricultural land in India unless they inherit it or receive it as a gift. However, they can invest in agricultural businesses or lease land through Indian entities. To ensure compliance with Indian property laws, it is advisable to seek professional guidance.

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