Government Looks Forward to Reduce The FDI Norms For Real Estate

  • 8th Aug 2013
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Government Looks Forward to Reduce The FDI Norms For Real Estate

The Government of housing and Urban Poverty Alleviation are now planning to ease the norms for FDI (Foreign Direct Investment) to attempt and encourage more participation of investors in the Indian housing sector.

There are mainly 3 areas in which the ministry is advising relief for all the FDI in real estate market, those areas are as follows:

1. The requirement of minimum built-up area should be reduced
2. The description of least lock-in period should be altered
3. The minimum required amount for investment should be reduced as said by Arun Kumar Misra the secretary for Ministry of Housing and Urban Poverty Alleviation.

If the above mentioned changes are adopted by the Cabinet, it will result in more number of players to be active partner in the FDI market as said by the official at one of the conference on for estate sector that was arranged by the Confederation of Indian Industry (CII) and CBRE South Asia.

Currently 100 per cent FDI is allotted in the real estate sector through the automatic route, subject to fulfillment of specific criteria. At least 25 acres (approx) of land is required for housing plots project and 12 acres of land is required to be eligible for FDI in case of Group-housing projects (apartments).

Recently the Reserve Bank of India altered the rules for external commercial loans in the reasonable housing sector. Apart from this the least experience of 5 years for developers is now reduced to three years. As per the legitimate the housing sectors for developers will now give opportunity to buy high-end housing with high profit margins.

Misra says that there are plans to invest Rs 50,000 Crore approx in affordable housing in the next 3 years at least from the government sector, sectioned by same amount of money from the banking division and also from the state governments. So the country will see a utilization of Rs 100,000 Crore approx in the next 5 years, which will cater to inexpensive housing. This means a mega business opportunity for people who want to get into it.

Girija Vyas who is the minister of Housing and Urban Poverty Alleviation says that the developers need not be distrustful of the projected real estate regulatory Bill, which is cleared by the Union Cabinet and shall be postponed to the monsoon session in Parliament.

The minister says there is much difficulty about nothing and promises to work in sync also says I assure there will be no inconvenience and “The Bill” will not affect the builders. Transparency and contractual obligations is what The Bill aims for. It will assure customer protection and advancement of the real estate sector through efficient guideline and prologue of speedy method for negotiation of disputes.

Misra says the housing sector is still counted risky but there are some ways to cope up with these things such as bringing a certain amount of transparency and official authorization for all the transactions that takes place. The first attempt through the Bill of real estate regulatory is not to make the whole market based on the foundation of haphazardness but to make the whole market based on groundwork of legalities.


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Suhas

Suhas Kataria is an ardent utopian, luxury real estate marketer & consultant, techpreneur (with a focus on proptech), SEO copywriter & trainer, lyricist, musician, rapper, runner & an eternal learner. As the Founder and CEO of Realspace, Suhas has 20 plus years of hands-on work experien... read more


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