FDI Investment Policies

Foreign direct investment (FDI) is not mere investment by the foreign companies in different sectors of a country rather it is now considered as an integral part of national development schemes for all the countries. The direct effect of FDI on a country's economy is pronounced by the growing output in augmenting of domestic capital, productivity and increased employment. The global popularity of FDI has made it an essential tool for initiating economic growth for nations.

FDI in India
India is emerging as one of the most likely places for FDI in Asia and the Pacific region. According to a global survey conducted by a renowned agency, India is the most favored destination for FDI in the world only next to China. India attracted more than three times foreign investment against US during the first half of 2005-06 fiscal.

India has been one of the most progressive & transparent Foreign Direct Investment (FDI) governments among developing countries. FDI played a major role in contributing to the overall growth of the economy of India in the recent years. The liberal decisions taken by government on FDI issues has opened the gates for the foreign investors. The real estate sector is hugely affected by these policies as this sector is flooded by the investors from all parts of the globe.

FDI Policies in Real Estate
The FDI policies have opened a gate for investors in real estate sector, which saw flooding of investors from all the parts of world. The policies mainly emphasize on giving exemptions in certain fields. We will take a look on the major changes in FDI in real estate sector.

• For different projects the minimum area to be developed will vary as follows:
  • A minimum of 10 hectares of land in case of development of serviced housing plots.
  • A minimum of 50,000 sq. mts in case of construction development projects.
  • Either of two conditions defined above would satisfy in case of combination of the above two projects.
  
  
• The minimum amount to be invested will be different for wholly owned subsidiary companies and for joint ventures with Indian partner/s. The capital would have to be managed within 6 months of beginning of business of the company.
  • A minimum of US$ 10 million will be required for a wholly owned subsidiary.
  • A minimum of US$ 5 million for joint ventures with Indian partner/s.
  
  
• The investors aren't allowed to repatriate the original investment prior to a period of three years. Though they may be allowed to exit earlier with prior approval of the government through the FIPB.
  
  
• The companies would have to complete the development of at least 50% of the entire project within five years from the date of receiving all legal clearances.
  
  
• They would not be allowed to sell under constructed plots where conveniences like roads, water supply, street lighting, drainage, and sewerage aren't provided as prescribed regulations. They would have to provide these infrastructure and receive the completion certificate from the concerned local body/service agency. Then they would be allowed to dispose the serviced housing plots.
  
  
• The investor shall be responsible for getting the essential approvals prescribed under applicable rules/bye-laws/regulations of the State Government/Municipal Body/ Local Body concerned.
  • Building/ layout plans
  • Developing internal and peripheral areas and other infrastructure facilities
  • Payment of development, external development and other charges.