Centre relaxes rules for FDI in real estate
Relaxed rules include reducing the minimum built-up area and capital requirement
By : DC Correspondent
Update: 2014-10-30 02:35 GMT
New Delhi: In a move, which will come as a welcome relief to cash-starved reality sector, the government on Wednesday decided to relax rules for allowing foreign direct investment in the construction sector including housing by reducing the minimum built-up area and capital requirement for foreign investment in such projects. Sources said, the approval has been given at a meeting of the union cabinet, which was chaired by Prime Minister Narendra Modi. The Cabinet has decided to reduce the minimum built-up area requirement for foreign direct investment in construction projects from 50,000 sq metres to 20,000 sq metres.
The minimum capital requirement has been brought down to $5 million from $10 million, they added. The Department of Industrial Policy & Promotion (DIPP), under the commerce and industry ministry, had moved the proposal to attract more foreign investment in construction and real estate sector that is facing a slowdown and liquidity crunch since last 2-3 years. Although 100 per cent foreign direct investment is allowed in townships, housing and built-up infrastructure and construction developments since 2005, the government has impo-sed certain conditions.
Between April 2000 and August 2014, the construction development including townships, housing and built-up infrastructure, received foreign direct investment worth $23.75 billion or 10 per cent of the total foreign direct investment attracted by India during the above stated period. In his Union budget 2014-15 speech, finance minister Arun Jaitley had said that the requirement of the built up area and capital conditions for foreign direct investment is being reduced from 50,000 sq mts to 20,000 sq mts and from $10 million to $5 million respectively.
The projects that commit at least 30 per cent of the total cost of the project for low cost affordable housing would be exempted from minimum built up area and capitalisation requirements, he had said.