How Foreign Companies Can Acquire Land in India: FDI Rules, Restrictions, and Process

The short answer to whether a foreign company can simply buy land in India is “NO.” Not directly. Not in the way a domestic Indian company walks into a property transaction. FEMA places specific restrictions on immovable property acquisition by persons resident outside India, and foreign companies fall squarely within that definition.The longer answer is more nuanced. A foreign company that has incorporated an Indian subsidiary can buy property through that subsidiary, which is an Indian entity. A foreign company operating a Branch Office has limited rights to buy property for operational use. And there are specific RBI permissions for certain categories of transactions. Foreign company buying property in India is not impossible. It is conditional, and the conditions depend entirely on how the foreign company is structured in India.

Can Foreign Companies Buy Land in India Directly?

Under FEMA, Foreign Company Buying Property in India through a direct purchase is not permitted. Section 6(3)(i) of FEMA, 1999 and the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019  does not permit a foreign company, as a person resident outside India, from acquiring immovable property in India by way of purchase. The only permitted routes are inheritance and acquisition through an Indian entity or other structures recognised under FEMA.

FEMA treats a foreign company as a non-resident entity. the Foreign Exchange Management Act, 1999 read with the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 , a person resident outside India is not permitted to purchase immovable property in India. The prohibition is broad and covers land, buildings, and any other category of immovable property. It applies regardless of the sector, the location, or the commercial purpose.

Two exceptions exist within this direct prohibition:

• Inheritance: A foreign company can inherit immovable property in India from a person who was resident in India at the time of the bequest. This is a passive acquisition, not a commercial purchase.
• RBI special permission: Under Section 6(3)(i) of the Foreign Exchange Management Act, 1999, read with the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, the Reserve Bank of India has the power to regulate and, where permitted under the applicable FEMA framework, approve the acquisition of immovable property by persons resident outside India. Such approvals are granted only in specific circumstances and on a case-by-case basis and should not be regarded as a standard route for acquiring immovable property in India.

Neither of these is a commercially usable route for a foreign company wanting to buy land for its India operations.

How Can a Foreign Company Buy Property in India Through an Indian Subsidiary?

The primary route for foreign company buying property in India is through an Indian subsidiary incorporated as a Private Limited Company. The subsidiary is a separate Indian legal entity and can purchase immovable property in India subject to sectoral FDI policy and any sector-specific restrictions. The property is owned by the Indian company, not by the foreign parent.

This is the route that works for almost every foreign company with a genuine operational need to own property in India. A Japanese manufacturer incorporates an Indian subsidiary, the subsidiary acquires a plot in a Special Economic Zone for factory construction, and the property sits on the Indian company’s balance sheet. The foreign parent does not own the property. The Indian subsidiary does.

The distinction matters enormously for FEMA and tax purposes. The foreign parent has made an FDI investment in the Indian subsidiary. The Indian subsidiary has then used those funds to buy property. This is two separate transactions with two separate regulatory frameworks.

The foreign investment in the Indian subsidiary must follow the relevant sector-specific FDI rules and be reported through Form FC-GPR within 30 days of allotting shares. The subsidiary’s subsequent purchase of property is a separate domestic transaction governed by local property laws and registration requirements. No separate RBI permission is required for the property purchase itself, provided the Indian subsidiary is operating in a sector where such property acquisition is a normal part of the business.

What Are the Sectoral Restrictions on FDI Rules for Land Purchase in India?

FDI rules for land purchase in India impose one significant restriction: FDI is prohibited in entities engaged in real estate business and in the construction of farm houses. Trading in Transferable Development Rights is also prohibited. However, FDI in construction development projects, industrial parks, housing, and commercial construction is permitted under the automatic route subject to minimum project size and capitalisation requirements.

The distinction between prohibited real estate trading and permitted construction development is where most foreign investors get confused.

For a foreign manufacturer, IT company, or logistics operator buying land to construct and operate a facility for their own use, the acquisition is not real estate business. It is capital expenditure for operational infrastructure. That distinction is what makes the acquisition permissible through an Indian subsidiary.

FDI in construction-development projects is permitted up to 100% under the Automatic Route, subject to the conditions prescribed under the Consolidated FDI Policy and the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019. The earlier requirements relating to a minimum project area of 20,000 square metres and minimum capitalization of USD 5 million were abolished in 2015 and are no longer applicable. Consequently, foreign investment in construction-development projects is no longer subject to minimum area or capitalization thresholds. Similarly, subsidiaries of manufacturing, IT or other operating companies acquiring land or premises for their own business operations are generally not subject to the construction-development FDI conditions, provided the acquisition is in compliance with FEMA and other applicable laws.

Can Foreign Companies Buy Agricultural Land in India?

Can foreign companies buy land in India that is classified as agricultural? No. Agricultural land, plantation property, and farm houses cannot be acquired by foreign entities or by persons resident outside India. This prohibition applies to both direct acquisition by foreign companies and indirect acquisition by Indian subsidiaries where the ultimate purpose involves agricultural use.

Land acquisition by foreign companies in India for agricultural purposes is one of the most absolute restrictions in FEMA. It does not matter whether the purpose is genuine farming, agri-business, food processing, or any other agriculture-related activity. The prohibition is on the character of the land, not the intent of the buyer.

For foreign companies in food processing, agribusiness, or plantation sectors that need a physical footprint in India, the route is typically:

• Lease agricultural land rather than purchase it. Long-term leases from Indian landowners are common in plantation and contract farming operations and do not involve the transfer of ownership to a foreign entity
• Set up an Indian subsidiary and have the subsidiary contract with Indian farmers directly, without owning agricultural land
• Purchase land that has been converted from agricultural to industrial or commercial use, subject to state-level land conversion approvals before the transaction
• Foreign companies can secure agricultural produce through contractual arrangements with farmers or farmer organisations without acquiring ownership of agricultural land. This is a common structure in food processing and agribusiness sectors.

The lease route is the most practical. Indian law allows foreign-owned subsidiaries to lease agricultural land, and long-term leases of 30 to 99 years are used by plantation companies, food processing units, and logistics operators who need large land parcels without triggering the agricultural land acquisition prohibition.

What Are the Property Rights of a Branch Office or Liaison Office in India?

A Branch Office operating in India can purchase immovable property for its own use, specifically for the conduct of its permitted activities. A Liaison Office or Representative Office cannot purchase property and must operate from leased premises. While the RBI issued draft regulations in October 2025 proposing a more principle-based framework and relaxation of certain operational requirements for Branch, Liaison and Project Offices. .

The Branch Office property right is narrow. The purchase must be for the office’s own operational use, not for investment, rental, or any other purpose. The property is acquired in the name of the foreign company (since the Branch Office is not a separate entity), and this creates a FEMA complication: immovable property owned by a foreign company in India must be disposed of in specific ways, either transferred to an Indian entity or repatriated through prescribed channels when the Branch Office eventually closes.

This is one reason why most foreign companies prefer the subsidiary route even for Branch Office-eligible activities. Property in the subsidiary’s name is cleaner to manage, easier to mortgage for project finance, and simpler to dispose of when the business purpose changes.

Before acquiring property through a Branch Office, foreign companies should ensure that the proposed acquisition falls within the scope of their RBI approval and complies with the applicable FEMA regulations.

What Is the Process for Foreign Company Buying Property in India Through a Subsidiary?

The process for foreign company buying property in India through an Indian subsidiary follows the same steps as any domestic Indian property purchase: title verification, execution of sale agreement, payment of stamp duty and registration charges, and registration of the sale deed with the Sub-Registrar. No separate RBI or FEMA filing is required for the property purchase, provided the funds used are legitimately invested capital in the subsidiary.

The steps in practice:

• Title search: Verify clean title through a certified title search, at minimum for the preceding 30 years. For agricultural land being converted to industrial use, verify the conversion order from the state revenue authority.
• Due diligence on encumbrances: Search for mortgages, charges, or liens registered against the property at the Sub-Registrar’s office.
• Sale agreement: Execute a sale agreement (also called an Agreement to Sell) before the final deed. Stamp duty on the agreement varies by state.
• Stamp duty and registration charges: Stamp duty ranges from 3% to 8% of the property value depending on the state and the buyer’s category. Registration charges are typically 1% of the property value subject to a state-specific cap. For a subsidiary registered in Karnataka buying industrial land in Bengaluru, both rates apply under Karnataka’s stamp duty schedule.
• Regulatory and land-use approvals: Verify zoning permissions, land-use classification, environmental clearances, building approvals, and any other local authority permissions required for the intended business activity. 
• Post-acquisition compliance: Update municipal records, property tax records, utility connections, and the company’s fixed asset register to reflect ownership of the property by the Indian subsidiary.
• Registration of sale deed: The final sale deed must be registered at the Sub-Registrar’s office with both parties or their authorised representatives present. The registered deed is the conclusive evidence of title.
• Mutation: Apply for mutation of the property in the revenue records to reflect the Indian subsidiary as the new owner.

The funds used for the purchase must come from the Indian subsidiary’s own resources: share capital invested by the foreign parent (properly reported through FC-GPR), retained earnings, or borrowed funds from Indian lenders. Using funds directly remitted by the foreign parent for a specific property purchase, without routing them through the subsidiary’s capital structure, creates a FEMA complication.

Conclusion

Foreign company buying property in India directly is not possible under FEMA. Through an Indian subsidiary, it is. The subsidiary owns the property as an Indian entity, the FDI into the subsidiary is reported through standard FEMA compliance, and the property purchase itself follows Indian law. Agricultural land remains off-limits under any structure.

The sector matters: a manufacturing company buying industrial land through its subsidiary for a factory is a straightforward FDI and property transaction. A company structured as a real estate business trying to buy and sell property for profit faces an FDI prohibition at the entity level.

Corporate Legit Consulting LLP advises foreign companies on FDI rules for land purchase in India, including subsidiary structuring for property acquisition, FEMA compliance for capital infusion, title due diligence coordination, stamp duty optimisation, and Branch Office property rights under the current and proposed FEMA framework. Reach out to Corporate Legit before the sale agreement is signed.