Can NRI become a partner in Indian partnership firm?

Yes, an NRI can become a partner in Indian partnership firm and he further can contribute to the capital of the firm subject to certain conditions. For any NRI to become a partner in a partnership firm there is no restriction, however, the law restricts the foreign investment by NRI by way of capital to the firm.

Let us understand how an NRI can contribute to the capital of the firm.

Foreign investment by NRI to the partnership firm

There are two ways to invest into a partnership firm by the NRI. All the two ways are described below:

• Investment on Nonrepatriation basis: The NRI may invest into the partnership firm on non-repatriation basis, i.e. capital invested once cannot be taken back by the NRI to any country outside India subject to the following conditions:
  • The amount must be invested by inward remittance or out of NRE/FCNR/NRO account.
  • The business of the firm or proprietary concern is not engaged in any agricultural/plantation or real estate business or print media sector.

• Investment on repatriation basis: If the NRI makes any investment on repatriation basis, then he shall first have to take prior approval of the government before investing.

Conclusion

In crux, the NRI can become a partner in partnership firm subject to some conditions. In case of any query or issue, please email us at info@hubco.in.

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