To encourage investors’ participation in the Indian housing sector, Department of Industrial Policy & Promotion (DIPP) has sent a draft note to the cabinet that seeks to ease foreign direct investment (FDI) norms in real estate projects.
“We have already sent the daft note last week proposing reduction in the minimum capitalisation for wholly-owned subsidiaries from $10 million to $5 million,” official sources in DIPP told The Pioneer.
The department has also done away with the concept of built-up area, as defined in the Real Estate (Regulation and Development) Bill to curb unfair practices.
However, the relaxation has come with a rider as earlier, at least 50 per cent of each such project had to be developed within a period of five years from the date of obtaining all statutory clearances.
Now, the developer will have to complete the entire project before the end of five years of getting all clearances. The note also reduced the minimum requirement for land for a serviced housing project to 5 hect from 10 hectares.
In case of construction-development projects, the minimum built-up area of 50,000 square meter has been changed to 20,000 square meter carpet area.
At present, 100 per cent FDI is permitted through the automatic route in the sector, which includes townships, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level built-up infrastructure.
From 2000-2013, $22.43 billion has flown in the sector in form of FDI, comprising 11 per cent of the total FDI flow in the country. In April-July 2013-14, $2.09 billion flew in the construction development sector including townships, housing, built-up infrastructure.