State-level relaxations on agricultural land — what they mean (and don't mean) for NRIs

Over the last decade, several Indian states have relaxed the old "only farmers can buy farmland" rule that historically kept their agricultural-land markets closed to non-agriculturists. Karnataka abolished the core restriction entirely in 2020; Maharashtra, Telangana, and Andhra Pradesh have each moved in the same direction; a handful of northern and hill states have gone the other way.

For an NRI watching this from abroad, the relaxations are interesting but largely inapplicable. FEMA still bars NRIs, OCIs, and foreign nationals from buying agricultural land in India, regardless of what state law now permits for Indian residents. This article explains the state-by-state position and then sets out exactly what does remain available to an NRI.

The FEMA baseline — unchanged

Under the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations — now consolidated in the RBI Master Direction on Acquisition and Transfer of Immovable Property — an NRI, OCI, or foreign national:

• Cannot purchase agricultural land, plantation property, or a farmhouse anywhere in India.
• Can inherit such property from a person who was resident in India, or from another NRI who held it lawfully before becoming an NRI.
• Can hold agricultural land acquired legally before becoming an NRI (i.e., while they were still resident).
• Cannot receive agricultural land as a gift from a resident relative.

State-level land-reform amendments do not override these FEMA rules. A relaxed state law that now allows any Indian citizen to buy farmland in Karnataka or Telangana still stops at the FEMA gate for anyone whose residential status is NRI / OCI / foreign.

The practical consequence: NRIs reading "farmland purchase rules relaxed" headlines should assume those changes are for resident Indian non-agriculturists, not for them.

Karnataka — the biggest change

The Karnataka Land Reforms (Amendment) Act, 2020 (notified September 2020) did what no other state had done: it scrapped Sections 79A, 79B, and 79C of the Karnataka Land Reforms Act, 1961 outright.

• Section 79A had capped non-agricultural income at ₹25 lakh per year for anyone buying agricultural land. Gone.
• Section 79B had restricted ownership to agriculturists only. Gone.
• Section 79C had carried the penalty provisions. Gone.

The 2015 amendment raising the income cap from ₹2 lakh to ₹25 lakh — which the old version of this article described as the state of play — has been superseded. There is no income cap at all now for Indian citizens buying agricultural land in Karnataka.

What remains:

• Family ceiling limits under the Karnataka Land Reforms Act still apply — a family of up to five can hold up to 10 units (one unit ≈ 5.4 acres of A-class dry land, scaled for class B, C, and D land). A family above five gets two additional units for each member, to a ceiling.
• Land-use conversion (to residential / commercial / industrial) still requires a separate process under the Karnataka Land Revenue Act and the relevant local planning authority.
• Eligibility to purchase still requires Indian citizenship and resident status — the change does not extend the right to NRIs, OCIs, or foreign nationals.

Maharashtra — industrial-use easement

Maharashtra did not scrap its old rule; it created exceptions.

Under the Maharashtra Tenancy and Agricultural Lands Act, 1948 (MTAL), a non-agriculturist generally still cannot buy agricultural land. But over a series of amendments, several bona-fide uses have been permitted without prior government permission:

• Industrial development — non-farmers can buy agricultural land for industrial use without prior approval, provided the land is put to that use within five years (extensible by five years on payment of a 2% cess on the land cost).
• Education, health, tourism — similar facilitated routes exist for bona-fide institutional purposes, with conditions.
• Non-agriculture (NA) zones — land already reclassified as "non-agricultural" in the town planning scheme can be bought by anyone, including non-agriculturists, without the MTAL route.

If the buyer fails to put the land to the permitted use within 10 years, it must be returned to the original farmer. Resale to a different purpose attracts a 25% transfer fee under the original amendment.

These facilitations are for industrial / institutional entities and resident Indian non-agriculturists — not for NRIs buying farmland as a private investment.

Telangana and Andhra Pradesh — broad access for Indian citizens

Both Telangana and Andhra Pradesh allow any Indian citizen to purchase agricultural land, without an agriculturist certificate and without an income cap. Ceiling limits on family holdings still apply.

Telangana's land-records reform under the Telangana Rights in Land and Pattadar Pass Books Act, 2020 (the Dharani portal) has also digitised the conveyancing of agricultural land, making due diligence faster. Again, the residency test still filters out NRIs.

Gujarat — still restrictive

Gujarat continues to apply the Gujarat Tenancy and Agricultural Lands Act, 1948: only agriculturists domiciled in Gujarat can buy agricultural land. Non-Gujarat Indian citizens typically need state government permission to buy even within the state. Supreme Court rulings (including Jayantilal Ratanchand Shah v. State of Gujarat, and related cases on Rameshbhai Jivraj Desai) have upheld the constitutional validity of this restriction.

Tamil Nadu and the southern states

Tamil Nadu, Kerala, and Puducherry generally permit any Indian citizen to buy agricultural land, subject to ceiling limits under the respective Land Reforms Acts. No agriculturist status is required for a resident Indian buyer. NRIs remain blocked under FEMA.

Northern states — Punjab, Haryana, Rajasthan, Uttar Pradesh, Madhya Pradesh

These states broadly allow Indian citizens to buy agricultural land, subject to their respective ceiling laws:

• Punjab Land Reforms Act — family ceiling of around 7 hectares of first-class land.
• Haryana Ceiling on Land Holdings Act — similar family ceiling.
• UP Zamindari Abolition and Land Reforms Act — restrictions on corporate buyers more than on individual Indian citizens.
• MP Land Revenue Code and Rajasthan Tenancy Act — similar regimes.

None of these open a door for NRIs.

Hill and special-category states — moving the opposite direction

A group of states, largely in the Himalayas and the Northeast, have tightened access to agricultural and even non-agricultural land over the same period:

• Himachal Pradesh — Section 118 of the HP Tenancy and Land Reforms Act requires state government permission for any non-HP-domicile buyer (even Indian citizens) to buy agricultural land. Violations have invited state action to cancel sale deeds.
• Uttarakhand — after the 2018 amendments and further tightening, non-resident Indian citizens face strict caps (often limited to 250 sqm of residential plot) and specific state permission for anything larger or for agricultural land.
• Jammu & Kashmir — post-2019 reorganisation, the Domicile Law permits domiciles of the Union Territory to buy land on the same footing as before, but blanket access to non-domicile Indian citizens remains limited.
• Northeast states (Nagaland, Mizoram, Meghalaya, Arunachal Pradesh, Sikkim) — constitutional protections under the Sixth Schedule and state-specific acts restrict outsiders, including non-tribal Indian citizens, from owning agricultural land.

What this all means for an NRI

• Headlines about "easier rules" are not about you. They are about resident Indian non-agriculturists getting access that was previously reserved to agriculturists. The NRI bar under FEMA is a separate and overriding rule.
• If you already owned agricultural land before leaving India, you can continue to hold it indefinitely. You can also sell it — but only to an Indian resident who is eligible under that state's agriculturist/ceiling laws. Sale proceeds credit to NRO and then follow the usual repatriation window.
• If you inherit agricultural land in India as an NRI, the inheritance is permitted. You can hold or sell, but cannot gift or give it to another NRI. Sale proceeds again follow the NRO / USD 1 million per FY framework.
• If you return to India and become a resident under FEMA (by staying for more than 182 days in a financial year with the intent to reside), you become eligible to buy agricultural land under the same state laws that apply to other resident Indian citizens. This is the only clean path for an NRI to acquire farmland — return first, buy second.
• Do not be persuaded by brokers offering structures like "buy in a resident relative's name" or "convert the land to non-agricultural first, then transfer". The first is benami — illegal under the Prohibition of Benami Property Transactions Act, 1988, with serious penalties. The second is fine if executed properly, but the reconversion must be genuine, in the resident seller's hands, and completed before sale — and the land then becomes non-agricultural, which many NRIs can freely buy anyway.
• Farmhouses are separately prohibited. Even non-agricultural land with a "farmhouse" classification sits in the same FEMA basket.

Bottom line

The old "farmers-only" rule has been weakening across most of India over the last decade, with Karnataka's 2020 abolition of Sections 79A/79B as the headline. But these are state-law liberalisations for resident Indian buyers. The FEMA bar on NRI, OCI, and foreign purchase of agricultural land, plantation property, and farmhouses is central legislation and unchanged. An NRI who wants farmland exposure in India either inherits it, holds pre-NRI acquisitions, or returns to India and becomes resident first. Any scheme that promises a short-cut around those three routes is either illegal or a scam.

For the general rules on what an NRI can and cannot buy, see agricultural land in India. For the broader NRI property framework, see buying and selling property in India. For inherited agricultural land specifically, see inheriting property.