Large developers have always been better capitalized than others with more access to money and at cheap cost (relatively). 100% FDI in townships and development of housing and commercial complexes is already permissible through the automatic route. DIPP has been advised to consolidate all FDI-related instructions such as notifications, press notes and others and prepare a single booklet so that investors wouldn’t have to refer to several documents from multiple time frames.
Investments by companies /trusts/partnerships owned by NRIs to be treated as domestic investments: NRI investments in real estate are estimated to be 10-15% (or more in select markets). Larger entities owned/controlled by NRIs will lead to more investments in housing units/projects, we believe.
Amending the FDI policy on LLPs: This will also be beneficial to the sector as an LLP structure saves tax leakages on distribution.
Transfer of investments to another non-resident investor has no lock-in and can be done through the automatic route. Earlier, such a transfer also required FIPB approval. Bringing this under automatic route will bring ease and speed to such transactions, which earlier had to face procedural delays.
Restrictions on minimum area (20,000 sq. m.) and capitalization (US$5 mn) removed. This was brought down from 50,000 sq. m. and US$10 mn last year. Condition of no lock-in already existed for investment in hotels and resorts, hospitals, SEZs, educations institutions and old-age homes.
100% FDI now permitted in completed projects for operations and management of townships, malls/shopping complexes and business centers. This will improve the service in Indian real estate with more players likely to enter the market. It could also mean cheaper services on this account.
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