The Short Answer

Under the Foreign Exchange Management Act (FEMA), a Non-Resident Indian (NRI) or Overseas Citizen of India (OCI) cannot purchase agricultural land, plantation property or a farmhouse in India. This restriction is set by the Reserve Bank of India (RBI) and applies regardless of how long you have lived abroad or how much you wish to invest. It is the single most important rule for the diaspora to understand before planning any farmland transaction.

What NRIs and OCIs CAN Do

  • Inherit agricultural land. You may inherit farmland from a resident Indian (or from a person who acquired it legally), with no restriction. This is the most common way NRIs come to own farmland.
  • Receive it as a gift from a resident relative, subject to the same inheritance principle.
  • Keep land you already owned before you became an NRI. Your status changing does not force a sale.
  • Sell or gift agricultural land you hold, but only to a resident Indian citizen. You cannot sell it to another NRI or OCI.

Why the Restriction Exists

Agricultural land in India is a state subject, and the rules are designed to keep farmland with cultivating residents, prevent speculative accumulation, and protect food-producing land. Several states add their own conditions, for example requiring the buyer to be an agriculturist or capping holdings, so even resident purchases are regulated.

Managing Inherited Farmland from Abroad

Most NRIs who inherit land either lease it to a local cultivator under a registered lease agreement, appoint a trusted Power of Attorney to manage operations, or use a professional farm-management service. The most important protective step is to keep the land records (mutation/jamabandi) updated in your name. Disputes over diaspora-owned land most often arise from out-of-date records, not the inheritance itself. Track what the land should earn using today's mandi prices.

Repatriating Sale Proceeds

If you sell inherited agricultural land to a resident, the sale proceeds go into your NRO account. Repatriation abroad is allowed up to USD 1 million per financial year, subject to payment of applicable taxes and submission of the required forms (15CA/15CB) certified by a chartered accountant.

Related

See the taxation of agricultural income for NRIs and whether NRIs qualify for PM Kisan. Back to the main NRI guide.