The Foreign Exchange Management Act regime evolved meaningfully through 2024-25, with significant clarifications around overseas direct investment, the LRS scheme, and the property holdings of non-resident Indians. For NRI investors holding Indian assets — or planning to — a clear-eyed view of the current position is essential.
This piece outlines the major shifts, the persistent traps, and the practical guidance we offer to our NRI clients in Singapore, the Gulf, the United Kingdom, the United States, and beyond.
The Property Question
NRIs and OCI cardholders can acquire residential and commercial property in India — but cannot acquire agricultural land, plantation property, or farmhouses (with narrow exceptions for inheritance). The temptation to "structure around" these restrictions through Indian relatives or Indian-resident holding companies is, almost without exception, a path to FEMA contravention.
What has changed: the Reserve Bank's guidance on documentation has become stricter. Title deeds, payment trails, and source-of-funds documentation are scrutinised more rigorously, particularly for properties exceeding ₹50 lakhs.
Repatriation · The Mechanics
Up to USD 1 million per financial year may be repatriated from an NRO account, subject to filing Form 15CA and Form 15CB. The threshold has remained stable, but the procedural rigour has tightened. Banks now routinely request:
- Original sale deed and registration evidence
- Capital gains computation and TDS proof
- Source of original acquisition (especially for inherited property)
- 15CA/CB filed by a chartered accountant
The CA's certificate is no longer a formality — banks audit the underlying computation and reject incomplete files.
Inherited Property · The Quiet Trap
Inherited property held by NRIs operates under a different regime. Repatriation of sale proceeds requires:
- The original property must have been acquired by the deceased while resident in India
- Repatriation cap of USD 1 million per FY still applies
- For inheritance from a non-resident, an RBI approval may be required
The single most common mistake we encounter is NRIs selling inherited Indian property without the FEMA-compliant documentation trail — only to discover, at the banking stage, that repatriation is blocked pending months of remedial work.
LRS and Reverse Flows
Resident Indians can remit up to USD 250,000 per financial year under the Liberalised Remittance Scheme. NRIs are not subject to LRS — their funds in NRE accounts are freely repatriable. The asymmetry matters when families plan capital flows: a resident parent funding an NRI child's investment abroad must operate within LRS; the child's repatriation back has no equivalent cap.
Investment in Indian Securities
NRIs may invest in Indian listed securities through the Portfolio Investment Scheme (PIS) operated through designated banks. Investment in unlisted shares — increasingly relevant as Indian startups raise capital from diaspora investors — operates under different FEMA provisions and may require RBI reporting depending on the sector and investment size.
The recent simplifications around startup investment are welcome but introduce their own complexities. Convertible instruments, SAFE notes adapted for the Indian context, and ESOPs granted to NRIs each carry distinct FEMA implications.
Our Practical Advice
For NRI clients, we recommend a periodic FEMA health-check — not annually, but every major transaction: each new property acquisition, each repatriation, each investment in unlisted Indian securities. The cost of preventive review is trivial compared to remedial work after a contravention is identified, whether by the bank, the auditor, or — in the worst case — the Enforcement Directorate.
FEMA contraventions, unlike many other regulatory failures, do not expire quietly. The Reserve Bank's compounding mechanism remains available, but compounding becomes more expensive — and more invasive — the longer a contravention persists.