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Restrictions on investment:

• No person resident outside India is allowed to make any investment to the capital of a firm / proprietary concern / any association of persons in India, except as provided in the Foreign Exchange Management Act, 1999, its rules, regulations, directions or orders.
• Such a person may make such an investment with the Reserve Bank's permission, on an application made to it, subject to certain terms and conditions.

Permission for investment in certain cases:

A Non-resident Indian or a person of Indian origin resident outside India may invest by making contributions to the capital of a firm or a proprietary concern in India. The following conditions must also be satisfied:

• the amount invested must be received either by inward remittance through normal banking channels or out of an account maintained with an authorized dealer / bank;
• the firm or the proprietary concern is not engaged in any agricultural / plantation activity or real estate business;
• the amount invested shall not be eligible for repatriation outside India;
• where investment is made out of NRSR account of the non-resident investor, the income earned on investment or proceeds of investment must be credited only to such account;
• the firm or the proprietary concern must not be engaged in print media.

Permission to a firm or a proprietary concern to make payment for the investments:

A firm or a proprietary concern in India may make payment to a non-resident Indian or a person of Indian origin for the following:

• the sum invested by such person in that firm or proprietary concern;
• the income accruing to such person by way of profit on such investment.