FDI in Housing

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FDI in Housing is allowed up to 100 percent under automatic route. Significant measures have been undertaken in India to boost FDI in housing.

Substantial growth of FDI in housing has taken place in India in recent years. However there are some specific guidelines that are to be followed for FDI in housing in India.

Important Aspects of Foreign Direct Investment in the Housing Sector in India-

  • 100 percent foreign direct investment is allowed under automatic route to the housing sector in India

  • A sector cap of three years on repatriation of profits on the investment made was entrusted on the housing sector

  • The issue of FDI in housing in India was handled by a Group of Ministers (GoM) which was headed by the then external affairs minister of India, Jaswant Singh.

  • Foreign Direct Investment in the housing sector follows the abrogation of Urban Land (Ceiling and Regulation) Act (ULCRA)

  • Repeal of ULCRA helped to free lands that were stuck in judicial proceedings, for establishing housing and corporate units

  • The local builders provided resistance to FDI in housing activities as they were not quite familiar with the international competition at that time.

FDI allotted to the Housing Sector in India-

  • A three year sector cap was imposed on the FDI Inflows on repatriation of profits on the investments made

  • More than ` 515 crores have been spent on the infrastructural development of housing and urban sector

  • FDI approvals in the first quarter of 1999 were worth 2.6 billion US dollars. This was a 25% increase over the FDI approvals during the same quarter in the previous year.

  • FDI Inflows increased from USD 0.9 billion (1998) to USD 1.4 billion (2007) which is a 49 percent rise as have been reported by various industry sources

Guidelines for Foreign Direct Investment in Housing-

  • At least 50 percent of the project must be accomplished within five years from the date of getting all the necessary clearances

  • Housing plots should acquire lands of at least 10 hectares

  • The foreign investors can decide about the mode of investment, either through Joint Venture company or fully owned subsidiary

  • The foreign investor will have to invest a minimum capital amount of USD 10 million while investing through a fully owned subsidiary

  • While investing through a Joint Venture company, the investor will have to bring in a capital amount of USD 5 million

  • The investor is not allowed to sell undeveloped or underdeveloped plots, such as, lands which do not have the facilities of roads, water supply, street lighting, drainage, sewerage, and other conveniences

  • Infrastructural facilities should be provided by the foreign investor and is also responsible for acquiring all the necessary approvals to execute the project

Last Updated on 05/08/2011