The Central Government is preparing to introduce new standards to ease Foreign Direct Investment (FDI) inflows into the real estate sector, which includes potentially lessening the existing three-year lock-in period requirement.
According to an official, the draft has been completed and is awaiting Cabinet approval. By easing these regulations, the Department for Promotion of Industry and Internal Trade (DPIIT) seeks to attract increased FDI and promote affordable homes.
The proposed changes involve easing the current three-year lock-in period. Additionally, the minimum capitalization requirement is expected to decrease from $10 million to $5 million for wholly-owned subsidiaries.
Furthermore, the draft suggests a reduction in the minimum built-up area for development projects from 50,000 square meters to 20,000 square meters of carpet area.
The existing FDI policy implies a three-year lock-in period for foreign investors from when funds are received, along with stipulations on minimum capitalization.
Between April 2000 and July 2013, infrastructure development, including townships and housing, garnered $22.43 billion in FDI, accounting for approximately 11% of the total FDI attracted by India.
The DPIIT, responsible for FDI-related matters, releases provisions through Press Notes or consolidated circulars. While the Cabinet previously approved 100% FDI in townships, housing, built-up infrastructure and construction projects, certain conditions were imposed.