INDIA BUSINESS WORLD - AUGUST 2006
THE MONTH THAT WAS...

REALTY FDI RULES EASED

THE government is planning to ease the entry of foreign investors in real estate by reducing the minimum area criteria to 10,000 sq mt for commercial developments and 10 acres for residential projects. At present, no FDI is permitted in commercial setups under 50,000 sq mt and housing ventures below 10 hectares.

Simultaneously, the government is also planning to introduce regulations to keep foreign investors away from real estate speculation. “The interest of Indian consumers and end users will be the top priority. We will also ensure that at least 50% of the project is completed within three years,” a government official told ET.

The government has already made it mandatory for foreign investors to bring in capital within six months of incorporating a JV. Investors are also not allowed to repatriate original investments before three years from completion of minimum capitalisation. However, in special cases, the foreign investor can be permitted to exit early but with prior FIPB approval. According to sources, urban development ministry would discuss the issue next month.