Finance/Compliance Consultant
75663 Points
Posted on 07 November 2026
Depends on who the foreigner is:
• FEMA (Non-debt Instruments) Rules 2019: investment in a partnership firm or proprietary concern by a person resident outside India is allowed only for NRIs or OCIs on a non-repatriation basis (Schedule IV), subject to sector restrictions (no agricultural, plantation or real estate business, print media).
• A foreign national who isn't an NRI or OCI needs prior RBI approval to contribute capital to an Indian partnership firm. In practice, RBI rarely grants this. The usual route is an LLP (FDI permitted under the automatic route where 100% FDI is allowed without conditions) or a company.
• The Partnership Act doesn't bar foreigners, but FEMA controls capital contribution and profit repatriation.
• So for a service-sector business with a foreign partner, form an LLP or private company, and report the FDI (FDI-LLP(I) / FC-GPR).