Economics · Economy
In the event of a resident individual deciding to set up a small manufacturing unit in a foreign country through the Liberalised Remittance Scheme (LRS), which of the following accurately describes the conditions under which a resident can utilize LRS for starting a business venture (Wholly Owned Subsidiary or Joint Venture) abroad?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The individual must repatriate 100% of the profits earned from the foreign subsidiary back to India within 30 days of declaration.
- 2Any business investment abroad requires the individual to have a minimum net worth of ₹10 crore and route funds through a Special Purpose Vehicle.
- 3Individuals can invest in a Joint Venture or Wholly Owned Subsidiary for any bona fide business activity except prohibited sectors like real estate, banking, or financial services, subject to the overall LRS limit.✓
- 4Resident individuals are strictly prohibited from using LRS for any form of business investment or setting up subsidiaries abroad.
Correct answer
Individuals can invest in a Joint Venture or Wholly Owned Subsidiary for any bona fide business activity except prohibited sectors like real estate, banking, or financial services, subject to the overall LRS limit.
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