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| Home > Business Law > FEMA Regulations, 2000 |
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| Investment in Firm or Proprietary Concern in India |
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Restrictions on investment:
- No person resident outside India is allowed to make any investment to the capital of a firm/proprietary concern/any association of persons in India, except as provided in the Foreign Exchange Management Act, 1999, its rules, regulations, directions or orders.
- Such a person may make such an investment with the Reserve Bank's permission, on an application made to it, subject to certain terms and conditions.
Permission for investment in certain cases:
A Non-resident Indian or a person of Indian origin resident outside India may invest by making contributions to the capital of a firm or a proprietary concern in India. The following conditions must also be satisfied:
- the amount invested must be received either by inward remittance through normal banking channels or out of an account maintained with an authorized dealer/bank;
- the firm or the proprietary concern is not engaged in any agricultural/plantation activity or real estate business;
- the amount invested shall not be eligible for repatriation outside India;
- where investment is made out of NRSR account of the non-resident investor, the income earned on investment or proceeds of investment must be credited only to such account;
- the firm or the proprietary concern must not be engaged in print media.
Permission to a firm or a proprietary concern to make payment for the investments:
A firm or a proprietary concern in India may make payment to a non-resident Indian or a person of Indian origin for the following:
- the sum invested by such person in that firm or proprietary concern;
- the income accruing to such person by way of profit on such investment.
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