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NRI
INVESTMENT
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 Investment in Partnership/ Proprietorship
The Reserve Bank has granted general permission to NRIs to invest by way of capital contribution in any proprietary or partnership concern in India engaged in any industrial, trading or commercial activity on non - repatriation basis. The amount invested should be remitted from abroad through normal banking channels or by transfer of funds held in investor’s bank accounts in India. The concern or the NRI does not engage in any agricultural/plantation activity or real estate business i.e. dealing in land and immovable property with a view to earning profit or income therefrom. The amount invested and income accruing thereon is not eligible for repatriation outside India and are payable only in non-convertible Indian rupees.
Consequently, it will not be necessary for such partnership/ proprietorship concerns in India to obtain permission of Reserve Bank for receiving capital contribution from NRIs provided the conditions mentioned in the Notification are satisfied. The firm should, however, submit the declaration in Form DIN to the concerned Regional Office or the Reserve Bank in whose jurisdiction it is situated within a period of 90 days from the receipt of investment. The profits due to the NRI investor may be credited to his ordinary Non Resident Account maintained within a bank in India.
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Investment in New Issues of Shares/ Debentures of Indian Companies
The Reserve Bank has granted general permission to NRIs/OCBs to subscribe to the shares/convertible debentures of an Indian company on non repatriation basis, and to an Indian company to subscribe to issue shares or convertible debentures by way of new/rights/bonus issue to NRIs/OCBs on non repatriation basis provided that the invested company is not engaged in agricultural/plantation activities or real estate business (excluding real estate development i.e. development of property or construction of houses) or chit fund or is not a Nidhi company. The payment for these shares should, however, be received from the NRIs/OCBs by inward remittance or by debit to their NRE/FCNR/NRO accounts maintained with an authorised dealer or an authorised bank in India. Consequently, it will be in order for companies in India to issue shares/convertible debentures to NRIs/OCBs on non repatriation basis by way of new, rights or bonus issues without the prior approval of the Reserve Bank provided the condition mentioned in the Notification are satisfied. The company should, however, file a declaration in Form DIN within 90 days from the date of receipt of the investment to the concerned Regional Office of the Reserve Bank in whose jurisdiction its registered office is situated. The company may also credit the dividend/interest in respect of the shares/convertible debentures to the investor’s NRO account with a bank in India.
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Investments Minus Repatriation
NRIs/OCBs that undertake not to seek at any time repatriation of the capital invested in India and the income earned thereon are permitted to invest on non repatriation basis.
The income earned on these investments as and when accrued is required to be credited to the Ordinary Non Resident Rupee (NRO) account of the investor.
The Reserve Bank of India would, however, permit repatriation of the net (i.e. after payment of tax) income. There are various categories of investment under this head.
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 Direct Investment
NRIs are permitted to make direct investment in partnership/ proprietorship concerns in India as also by way of subscription to shares/ debentures of Indian companies. They are also permitted to place funds in company deposits. Similar facilities are also available to OCBs with certain exceptions. Investments made will either be on repatriation or on non-repatriation basis depending on the terms and conditions applicable under the existing schemes for NRI investment. Wherever the investments are allowed with repatriation benefits, the funds for the purpose should be received by inward remittances from abroad or from the investor’s NRE/ FCNR Accounts. However, in respect of investment on non-repatriation basis, funds in NRO Accounts could also be used. Non resident Indians resident in Nepal will be permitted to make investments in India provided the funds for the purpose are remitted in free foreign exchange through proper banking channels.
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