Conditions for Foreign Investment in Real Estate Sector in India

Real Estate Investing in India

Foreign
Direct Investment in some of the aforesaid areas (not all) is
subject some conditions, some of which are as follows:

• 
  

  Develop a minimum
  land area of 10 hectares for serviced housing plots, and a
  minimum built-up area of 50,000 sq m in case of construction
  projects. The policy does not clearly define ‘built-up’, though
  FSI (Floor Space Index)/FAR (Floor Area Ratio) could be used as
  a basis for the same.

  
  
• 
  

  Fulfill the minimum
  capitalization norm of $10 million for a wholly-owned subsidiary
  and $5 million for JVs. The funds would have to be brought in
  within six months of commencement of business (which needs to be
  defined) of the subsidiary or JV.

  
  
• 
  

  Complete at least
  50% of the integrated project within five years from the date of
  obtaining all clearances.

  
  
• 
  

  Do not sell
  undeveloped plots (with no infrastructural backup). Provide
  infrastructure and obtain the completion certificate from the
  concerned local body before disposal. This clause needs
  amendment because certificates are sometimes not issued for
  months on end, even years, an uncertainty which tends to raise
  project cost, often beyond viability.

  
  
• 
  

  Do not repatriate
  original investment before three years from completion of
  minimum capitalization. Early exits require prior approval of
  the Foreign Investment and Promotion Board.

  
  
• 
  

  Conform with all
  applicable local and state laws, and abide by all regulations
  and norms.