The Indian Government on 10 November 2015 removed all restriction on foreign direct investments into the real estate and construction sector except ...
The Indian Government on 10 November 2015 removed all restriction on foreign direct investments into the real estate and construction sector except for a three-year lock-in period for select projects, in a major boost to the cash-starved sector. “Any improvement leading to less red tape is welcome,” said National Real Estate Development Council (NAREDCO – Maharashtra) President Niranjan Hiranandani.
“The move is expected to improve liquidity scenario in real estate and construction sector. NAREDCO had recently organized the Real Estate and Infrastructure Investors’ Summit – 2015 (5 – 6 October 2015), where this was among the topics which had been discussed,” said Niranjan Hiranandani. He said that the knowledge take-away from the NAREDCO Real Estate and Infrastructure Investors’ Summit was that there exists good appetite for Indian real estate among investors. Easing of FDI norms will enable speeding up of the investment process, he added.
Elucidating on the Indian Government’s move, Niranjan Hiranandani said the government has done away with entry and exit barriers in construction. He mentioned two aspects, first, area restriction (20,000 sq. m) and secondly, minimum capitalization requirement (US $ 5 million) to be brought in within six months of commencement of business, both of which have been removed. Further, foreign investors can exit and repatriate investments before a project is completed, but with a lock-in of three years, he added.
Niranjan Hiranandani quoted Indian Finance Minister Arun Jaitley as having said, “In the new norms, outdated conditionalities have been done away with and many more areas have been put on the automatic route. Most important is the construction sector. There has been a slowdown here. Now that interest rates have started easing, the sector will hopefully pick up. The restrictions on capital, area and lock-in period have been highly liberalized.”
Niranjan Hiranandani said he was pleased at having ‘positive thinking’ become a reality.
In his new role as Founder-First President, NAREDCO (Maharashtra), Niranjan Hiranandani said NAREDCO will evolve to a higher level of recognition and be a conduit between the authorities, Government and developers for better functioning of the real estate industry. “NAREDCO has taken various initiatives in the past, and will do so in the future, to create platform for the developers to address their difficulties and getting it resolved with the Government and other associated authorities. NAREDCO will make sure that in the current scenario, with industry facing many challenges; will work to simplify processes,” he concluded.