Foreign investors looking to invest in the real estate sector in India
may be allowed to bring in only $5 million as minimum capital, down from
the current $10 million, if the Cabinet approves the proposal of
relaxing the conditions for FDI in the sector.
As per the extant
foreign direct investment policy, though 100 per cent FDI in the
construction development sector is allowed through automatic route, the
department of industrial policy and promotion (DIPP) is looking at
relaxing the conditions for investment to boost the cash-strapped
"We have proposed reduction in the minimum capitalisation
for wholly-owned subsidiaries from $10 million to $5 million. The funds
will have to be brought in within six months of commencement of
business of the company. This has been done keeping in mind low and
affordable housing," an official told The Indian Express.
official added that the Cabinet note will be circulated this week for
comments. Further, the department has also done away with the concept of
built-up area. Instead, carpet area has been introduced in line with
the real estate (regulation and development) bill, 2013. Introduction of
the concept of only 'carpet area' will curb unfair trade practices.
minimum area to be developed in case of serviced housing plots has also
been "reduced to 5 hectares from 10 hectares while in case of
construction-development projects, a minimum carpet area of 20,000 sq
mts has been introduced instead of the existing 50,000 sq mts built-up
area in all class-I cities having population of more than one lakh."
"However, dealing in land and immovable property will not be allowed," the official said.
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.
encourage investor participation in the country's housing sector, the
ministry of housing and urban poverty alleviation had earlier proposed
easing of norms for FDI in real estate projects.
*DIPP has also done away with the concept of built-up area and introduced carpet area in line with the real estate bill, 2013
*Minimum area to be developed in case of serviced housing plots has been reduced to 5 hectares
*In case of construction-development projects, a minimum carpet area of 20,000 sq mts has been introduced instead of the 50,000 sq mts built-up area