22 July , 2020 Fdiindia
Good News for Realtors: Govt might allow 100?I in Housing Projects Completed
India is currently under the reviewing process when it comes to foreign direct investment (FDI) policy for the real estate sector. This is being done to see if the 100% overseas investment can still be allowed in the completed projects. All the consequences the advantages and disadvantages are all being contemplated to see if this would allow real estate companies to monetize the completed projects amid the ongoing liquidity crisis which has all been aggravated by the Covid-19 pandemic situation. This would then help revive an economically critical sector.
The Department for Promotion of Industry and Internal Trade (DPIIT) is the one paying close attention and looking at all the different ways to attract more and more lucrative investment when it comes to the construction development on an increased interest in the sector from overseas. “There are only limited sectors where FDI norms can be further relaxed and housing is one of them,” said an official.
As per the Indian government, the plan is to really help simplify the process and to make sure that it is easier and more lucrative to invest in India, DPIIT plans to seek a proper cabinet approval on the same. This would greatly help relax all the norms and allow about 74?I in the overall defence manufacturing under the automatic route. The FDI cap defined for defence is raised as part of the overall Atmanirbhar package, it needs to be operationalized in the best way possible. DPIIT would be the one to issue a comprehensive and detailed press note which is subsequent to the cabinet nod. FDI into Indian business and economic welfare rose 13% to a record $49.97 billion in FY20 from $44.36 billion in a year’s time earlier.
India currently is planning to allow 100?I through the automatic route in construction-development projects — townships, residential and commercial buildings, roads, bridges, hotels, resorts, hospitals, educational institutions, recreational facilities and city and regional-level infrastructure. This is subjected to a conditions such as a three-year lock-in period prior to making the original investment which can be repatriated. “We are studying the policy carefully as the restriction is largely aimed at preventing speculation in the sector,” said another person aware of the matter. Since the tax collections and divestments are definitely unlikely to pick up, the experts suggest that the foreign investment is the sole way possible to pump up the overall liquidity into the system and kick-
start economic activity. “Industry has been asking for widening the scope of FDI,” said an expert on FDI issues. “Three-year lock-in period is a good enough time for the government to check for any speculation.”