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Can NRIs Start a Sole Proprietorship Business in India?

NRIs can start a sole proprietorship business in India, for sure. But the process has to follow strict guidelines. The investments would be on a non-repatriation basis, or you would have to receive prior permission from the Indian government.

There are three parts to NRI investment in a sole proprietorship business in India:

  • Investment on a non-repatriation basis
  • Investment on repatriation basis
  • Investment by any other non-resident besides NRIs

Investment in sole proprietorship on a non-repatriation basis

The money that you invest here has to remain in India, as it is not eligible for repatriation. There are two conditions here:

  • You must have invested the amount via inward remittance or through your NRE/NRO/FCNR account. You must be maintaining this account with an authorized banking service provider.
  • You can’t invest in any proprietorship business that would deal with plantation or agricultural products, real estate business, or print media in any way.

Investment in sole proprietorship on repatriation basis

If you plan to invest in a sole proprietorship business on a repatriation basis, you would need prior approval from the Reserve Bank of India (RBI). You would also need to discuss the matter with the Secretariat for Industrial Assistance (SIA), Government of India. After the discussion, you would get final approval from the SIA.

Investment by any other non-resident

Any other non-resident apart from NRIs would need to obtain prior approval from the RBI to make an investment in a proprietorship firm’s capital.

Documentation requirement

  • Copy of your passport and visa attested by the Indian Embassy/High Commission of your country of residence
  • Proof of your residence in the foreign country and a copy of your address
  • Your recent photograph
  • Your occupation and contact details
  • Your bank account details

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