The minimum floor area and investment needed by foreign development companies have been at least halved to help promote Foreign Direct Investment, India’s cabinet has announced.
The Indian government aims to boost overseas investment in the property sector by more than halving the minimum project size required and investment allowed.
The minimum floor area for development projects to allow overseas investment is now 20,000 square metres instead of the previous 50,000 square metres, India’s cabinet has announced.
For serviced plots, there is no minimum land requirement now. Previously, the figure was 10 hectares. The cabinet also halved the minimum capital investment for foreign companies to US$5million.
Before the latest ruling, India’s government only allowed 100% Foreign Direct Investment (FDI) in real estate development with strict conditions.
Foreign investors will now be allowed to expatriate the investment on completion of the project or three years after the final investment is made, the cabinet says.
The moves are designed to boost India’s construction sector, as part of plans by Prime Minister Narendra Modi to boost economic growth, build every citizen a home by 2019 and develop 100 smart cities by 2020.
Anuj Puri, chairman and country head at JLL India, told the Times of India, “These moves will help in inner-city development. The 20,000 square metre requirement will allow investment to flow into south Mumbai or central Delhi. So far, investment was going to the outskirts as it was tough to find area to develop or construct 50,000 square metres. As a result risk profile was higher and returns were lower (for foreign investors).”
In the financial year to March 2014, India received US$1.2billion of FDI, slightly down on the previous year.
By Adrian Bishop, Editor, OPP Connect