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FDI REAL ESTATE SECTOR
Indian Government Laws
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An overview of
Indian Government Laws with regard to
Foreign Direct Investment in Real Estate and related Areas |
In the year 2005, the Indian government, allowed 100 percent foreign direct investment (FDI) in construction and development projects. These proposals are now cleared through the automatic route and no longer have to approach the Foreign Investment Promotion Board (FIBP) for clearances.
The segments that fall within the above automatic FDI approval include
Townships,
Housing,
Built-up infrastructure and
Construction-development projects,
The above list is not restricted to housing alone, but also includes
Commercial premises,
Hotels,
Resorts,
Hospitals,
Educational institutions,
Recreational facilities,
City and regional level infrastructure
In order to catalyze investment in a vital sector of the economy.
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Key Features
The salient features for the above 100% FDI proposal cleared by the government are: |
a) FDI is now permitted up to 100% under the "automatic route" under the ambit of which foreign investors and only needs to intimate FIBP of their intention of invest and not seek specific approval.
b) Minimum area to be developed under each project is
Development projects, which could be any nature and not limited to office buildings, IT/Business parks, shopping centres, industrial/logistic and warehousing facilities, hotels and serviced apartments Minimum built up area of 50,000 square meters.
Plotted housing development where in only individual plots of land with support infrastructure such as roads and utility connections are sold to individual occupiers within a large development - Minimum land area of 10 hectares.
In case of project combining elements of both the above categories, the investor would be required to meet only one of the above two criteria.
c) The investment would further be subject to the following conditions:
Minimum capitalization of US $10 million for wholly owned subsidiaries and US$5 million for joint ventures with Indian partners. The funds would have to be brought in with in six months of company commencing its business.
Original investment cannot be repatriated before a period of three years from completion of minimum capitalization. However, the investor may be permitted to exit earlier with prior approval of the government through the Foreign Investment Promotion Board (FIPB)
d) The Foreign investor would not be permitted to sell or trade in undeveloped plots or raw land. "Undeveloped plots" will mean where roads, water supply, street lighting, drainage, sewerage, and other conveniences, have not been made the concerned local body/service agency before he is allowed to dispose the plots.
This measure has been provided in order to discourage foreign investment in speculative investment in trading of the land and without any development or any value addition.
e) The project shall conform to the norms and standards, including land use requirements, provision of community amenities and common facilities, as laid down in the applicable building control regulations, bye-laws rules, and other regulations of the State government/ municipal/local body concerned in the city.
If you would like further information on how we work or if you have an opportunity which you would like to discuss with us please contact us by any of the following contact options:
Telephone: ++91-11-41638091-95
Fax: ++91-11-41638097/98
Email: vikram@parijatconsultings.com
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