Govt relaxes FDI policy for real estate sector

Q: The laxity of the lock-in period comes as a major help for the industry. The new rules allow FDI in smaller projects which is a big relief.

Vibhor, Delhi

5th December 2014

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This is an exceptionally positive step and effectively meets most of the demands made by the industry. Besides, by licencing transfer of shares between two non-resident companies the government has actually opened the floodgates for FDI in the real estate sector.

James, Delhi

5th December 2014

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Instead of this, under the new policy, the DIPP has also reduced minimum area requirements. As opposed to the previous policy, foreign real estate developers can now invest in construction development projects having a minimum floor area of 20000 sq-mtrs. Earlier the requirement was 50000 sq-mtrs of built-up area. Similarly, the capital requirement was decreased from $10 million to $5 million.

Richa, Delhi

5th December 2014

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Not only this in a significant step, the government also allowed foreign investors to invest in completed project for operation and management.

In other words you can say that 100% FDI under the automatic route can now come in projects that have been completed by way of townships, malls and shopping complexes, and business centres. This was not allowed earlier.

James, Delhi

5th December 2014

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Earlier foreign developers were not allowed to take out the invested amount before three years from completion of minimum capitalisation. However, now the foreign firm can take its money out or transfer its share to another non-resident company before completing the project on approval from the government.

Richa, Delhi

5th December 2014

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Briefing the decision taken by the Cabinet in November, the Department of Industrial Policy and Promotion told that foreign developers would now be allowed to exit a project only after completion or after completing the basic trunk infrastructure such as roads, water supply, street lighting, drainage and sewage.

James, Delhi

5th December 2014

Comment

Good news for the realty market!!!!!!!!
The government on Wednesday, 4th December 2014, relieved foreign direct investment ruless for the construction development sector which is expected to provide a significant encourage to the sector in terms of greater foreign capital inflows.

Richa, Delhi

5th December 2014

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