House For NRIs, PIOS, Welcoming NRI Investment


The Foreign Exchange Management Act (Fema) rules welcome investment in property in India by NRIs (non-resident Indians), PIO (person of Indian origin), and in some cases, foreign nationals residing in India.
Asha Nayar-Basu, a partner in S Jalan & Co, Attorneys, India, says: “Fema regulations permit a NRI or a PIO to acquire immovable property in India, other than agricultural land or, plantation property or farm house. Further, foreign companies which have permission to open a branch or project office in India are also allowed to acquire immovable property in India, which is necessary carrying on their business.
“NRIs or PIOs are allowed to repatriate an amount up to one million dollars, per financial year (April-March), out of the balances held in the Non-Resident (Ordinary) Rupee (NRO) account, subject to compliance with applicable tax requirements. This amount includes sale proceeds of assets acquired by way of inheritance or settlement.”
A person resident outside India is categorized as non-resident Indian (NRI) or a foreign national of Indian origin (PIO) or a foreign national of non-Indian origin. Section 2 (v) and Section 2 (w) of Fema, 1999, defines ‘person resident in India’ and a ‘person resident outside India’, respectively.
What about say a British national, posted in India for work – if he wants to buy property in India – does our law permit him to invest? The answer is yes, but only after the appropriate approvals are in place. Asha says: “A foreign national who is a ‘person resident in India’ within the meaning of Section 2 (v) of Fema, 1999, can purchase immovable property in India, but the person concerned would have to obtain the approvals and fulfil the requirements, if any, prescribed by other authorities, like the state government concerned, etc. However, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of the Reserve Bank of India.”
Taking the same example; the British national staying in UK cannot invest. According to the Indian law, a foreign national resident outside India cannot buy immovable property in India.
The Indian law does not permit a foreign national of non-Indian origin, resident outside India to purchase any immovable property in India unless such property is acquired by way of inheritance from a person who was resident in India. However, he or she can acquire or transfer immovable property in India, on lease, not exceeding five years. In such cases, there is no requirement of taking any permission of, or reporting to the Reserve Bank.
What are the documents to be filed with the Reserve Bank after the purchase? An NRI or PIO who has purchased residential or commercial property under general permission is not required to file any document or report with the Reserve Bank.
Also, there are no restrictions on the number of residential and commercial properties that can be purchased. A significant market for many developers like DLF, Unitech, Raheja, Omaxe, Parsvnath, etc, is the NRI investor.
Typically, the main criterion for investment by an NRI investor is a reputed builder, good location and an attractive layout. Some of the projects which have found favour with the NRI community in the recent past include luxury properties in Gurgaon like villas by Emaar MGF, Belvedere of Central Park, Aralias and Magnolia by the DLF group, Tata Primanti, IREO and M3M, etc.
It is estimated that of particular interest is the population of NRIs and PIOs in California, which is over 4 lakh, and vastly spread in bay area and LA. There is specific interest in the Silicon Valley too, which is predominantly populated by techies who work and live in and around the area, like Sunnyvale, Santa Clara, Milpitas, Fremont, etc.
Commercial property investment is the latest trend with NRIs. Investment in residential property, a home away from home, was the norm for NRIs, so far. But in the recent past, in a bid to multiply money, they are gravitating towards investment in commercial property. Many NRIs prefer commercial properties as they come with greater clarity on tenancy rights and it’s easier to evict tenants from these buildings.
A spokesperson from Omaxe says: “We have launched a new exciting scheme of assured return on a commercial property ready for possession. This scheme is of specific interest to NRI investors as it gives the highest return and is being offered by a credible developer with a proven track record.”
Vigneshwara Developers have a significant market in New York, New Jersey, Chicago, Massachusetts, and Washington. Divyanshu Sharma, general manager (marketing and sales) at Vigneshwara Developers, says: “The trends in the recent past show that most NRI investments have come to commercial property rather than residential, as it’s considered a safer deal.
The NRI community is largely interested in investments which reap timely returns and lead to augmentation in property prices. The Delhi NCR attracts investors from across the world but the major focus is on Gurgaon, as this area has the maximum number of MNC’s and major IT-ITeS centres, with excellent connectivity like proximity to the international airport and the forthcoming express highway.”

1 Comment
  1. Abella 5 years ago

    this is an amazing article, thanks.

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