Indian Real Estate FDI

Posted on: Thursday, June 21st, 2012
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Foreign direct investment (FDI) has been an integral part of development strategy for countries globally. It augments domestic capital and helps initiate economic growth for nations. For India too, FDI inflow means growth in productivity and employment, transfer of new technology and a competitive business environment.

Not surprisingly, Indian Government with a view to generate economic activity and to catalyse investment in housing, built-up infrastructure and construction-development projects decided to allow FDI up to 100% under the automatic route in townships, housing, built-up infrastructure and construction-development projects.

As per the new policy the real estate and infrastructure category would include but not be restricted to housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure. The investments however will be subject to certain guidelines such as minimum area to be developed under each project, minimum capitalization, time period for project development, investor responsibilities and norms and standards, including land use requirements and provision of community amenities and facilities. The step aims to create new employment opportunities and add to the available housing stock and built-up infrastructure.

Indeed, India holds huge potential to attract foreign investments into real estate due to stable demand, demographic factors and focus on affordable housing. The 100 per cent relaxation of FDI in various realty segments not only increases flow of foreign capital into the sector but also provides fiscal incentives to developers to build economical housing for the masses. International companies like Hines, Tishman Speyer, Emaar Properties, Ascendas, Capitaland, Portman Holdings and Homex have already made forays into the Indian realty market. As per industry experts, in the coming years, the growing opportunities in the Indian real estate and infrastructure sector will attract more global players. What is needed is the increased transparency and improved project delivery and execution by the industry as well as streamlined government policies to introduce reforms and boost the real estate sector.

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