Can NRIs Buy Agricultural Land in India?

India takes pride in being among the top nations receiving huge remittances from NRIs. But ironically, when this remittance comes into something rooted and symbolic, that is agricultural land—the land which feeds its rural economy, which is deeply valued in generations, closes its doors firmly on India’s global diaspora. Why is that? Can NRIs Buy Agricultural Land in India?

While NRIs may be encouraged to invest in swanky apartments, SEZs, and have even been aired for REITs, they can never legally own an iota of farmland except using inheritance or a sharply defined gift. This paradox, as we earlier said, is not mere bureaucracy; it is a thoroughly intentional policy choice to insulate agricultural resources from speculative concerns, even if doing so excludes millions of Indians abroad.

In this blog, we will deconstruct this regulatory dichotomy, which seeks to preserve India’s agrarian character while embracing its global citizenry. We will explore the legal restrictions and their conditional exceptions, and then touch on the very real consequences that NRIs may face if they cross the invisible line drawn by FEMA and RBI regulations.

The Legal Framework: What Does the Law Say?

The FEMA and the rules framed by the RBI under it govern the acquisition and transfer of immovable property in India by NRIs and Persons of Indian Origin (PIOs).

The current FEMA framework has:

• No agricultural land, plantation property, or farmhouse in India shall be acquired by an NRI.

• This rule is applicable even if the land is required for personal purposes or to do hobby farming or for any future investment purpose.
  
• For the acquisition of such lands, there is no general or special permission granted by the RBI too.

Simply stated, an NRI cannot directly acquire agricultural land anywhere in India irrespective of purpose or the valuation of the investment.

For instance, Rahul is an NRI citizen who is currently living in Canada, and he wanted to own two acres of agricultural land in Punjab with the intention of building a small farmhouse in due time. Even at a very good rate, the land would easily be termed as non-commercial, but such a transaction will not be entertained because of FEMA guidelines.

Agricultural vs Non-Agricultural Land Ownership for NRIs

Legal distinction is important between agricultural and non-agricultural land. Different provisions are there in the law for both.

Agricultural Land

• Land used for growing crops or farming.

• Typically rural or semi-rural.

• Such land is for purchase only by resident Indians who are engaged in agriculture.

Non-Agricultural Land

• For residential plots, commercial spaces, and industrial land.

• NRIs can acquire such property without getting any prior permission from the RBI.

• Allowed to be owned either individually or in joint ownership with other NRIs or with Indian residents (only for non-agricultural land).

Hence, when it comes to non-resident Indians owning agricultural land versus non-agricultural land, the legislation prohibits the former, but under certain terms, allows the latter.

NRI Agricultural Land Ownership Explained: Are There Any Exceptions?

If NRIs cannot buy agricultural land, the law allows them to own agricultural land in certain legally sanctioned scenarios:

Inheritance 

NRIs can inherit agricultural land in India from:

• A resident Indian, and

• Another NRI, provided the land was legally owned before FEMA restrictions.

It should come either by way of succession or a legal will as per Indian succession laws with no commercial transactions.

Suppose, for instance, Priya, an NRI in the UK, inherits three acres of farmland in Tamil Nadu from her grandfather, who was a resident Indian farmer. That is entirely legal, and now Priya becomes the lawful owner.

But she cannot sell this land to another NRI.

If she wants to sell, it must be sold to a resident Indian citizen.

Gift from a Relative

An NRI can also receive agricultural land as a gift, but only by a close relative (as defined under Section 2(77) of the Companies Act), that is:

• Parents
• Siblings
• Spouse
• Children

Gifting agricultural land to an NRI does not, however, lift the general prohibition as to use or sale thereafter. The NRI is allowed to possess the land, but development for commercial purposes is not permitted, and it cannot be transferred to another NRI.

Also Read: NRI Real Estate Investment in India (2025): What You Need to Know

Can NRIs Buy Agricultural Land Jointly with Resident Indians

One easy option often availed of by NRIs is to buy agricultural land jointly with a resident Indian, often a relative. 

But does this mean that the transaction is legal?

The answer is No. Under FEMA regulations, agricultural land cannot be owned by NRIs-even if one of the co-owners happens to be a resident Indian. The entire transaction becomes invalid just due to the involvement of an NRI. 

Penalty for NRI Buying Agricultural Land in India Illegally

Disrespect for FEMA regulations can hardly be termed a petty offence. When an NRI illegally purchases agricultural land in India, she may face severe penalties, which include:

• Declaring the transaction void ab initio (invalid from the outset).
• Confiscation of the property.
• Monetary penalties of up to three times the transaction value.

While this is an act under the Enforcement Directorate (ED) may also be possible.

Furthermore, such violations can also lead to the NRI being blacklisted in the future for real estate transactions in India under FEMA.

Can an NRI Sell or Repatriate Funds from Inherited Agricultural Land?

Yes, NRIS can sell agricultural land if it was legally inherited or donated by an eligible relative. 

The buyer must be a resident Indian; The sale proceeds must then be deposited into the Non-Resident Ordinary (NRO) account.

The amount repatriated will be limited to USD 1 million for a financial year and will depend on:

• Proper documentation for inheritance.
• Payment of taxes applicable (capital gains, etc.)
• Compliance with the repatriation regulation of the RBI.

What If the Agricultural Land Is Converted to Non-Agricultural?

Some NRIs are tempted to acquire agricultural land and reclassify it to non-agricultural use for residential or commercial purposes. But this approach does not help them.

According to FEMA, NRIs cannot purchase agricultural land in the first instance. Hence the very fact that conversion exists at the level of a state does not allow an NRI to be part of an illegal acquisition there.

Land conversion cannot be accepted as a reasonable exception to the implementation of FEMA.

Alternative Investment Options for NRIs Interested in Agriculture

If an NRI wants to invest in agriculture or agro-investment, or rural development, then there are several legitimate indirect means open for rent: 

To rent out land from resident Indians under a valid rental contract for use

• Invest in the agritech start-ups.

• Financing agricultural cooperatives.

• Contract farming associations.

• Invest in shares of agricultural infrastructure companies.

All the above alternatives are used to invest in or participate in the agricultural ecosystem of the country without violating any land ownership laws by NRIs.

Compliance Is Not Optional

In a nutshell, NRIs cannot buy agricultural land in India legally, regardless of its size, location, or use. Only heritage and gift are the two exceptions; both need to comply with FEMA and state land laws as such. 

There are serious implications of trying to exploit such loopholes by enlisting the names of resident Indians or in informal agreements. 

First, an NRI should consult:

• A FEMA expert or legal advisor before investment in land in India.

• Clear classification and ownership history of the land.

• Comply with the regulations of the RBI and Income Tax regarding use.