Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta
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Budget 2014 brought in a lieu of measures for real estate sector in India. Among the many measures announced in budget 2014, the one which can have meaningful impact on realty sector in India was ‘Relaxation in Foreign Direct Investment (FDI) norms for real estate sector ’.
The area requirements for Construction-development projects were reduced to built-up area of 20,000 sq. mts now from 50000 sq. mts earlier. At the same time, Minimum capitalization for wholly owned subsidiaries were reduced to US$ 5 million now from US$ 10 million earlier.
Now, with these relaxations, it gives large as well as small scale developer an opportunity to develop realty projects jointly with foreign companies. The level of partnership between an Indian developer and the foreign company can be financial, technical, or both.
Indian real estate developers in partnership with foreign companies can undertake the development of township, group housing complexes, office space premises, retail buildings, roads & bridges. The FDI in the sector is permitted through the automatic route, i.e. without requiring the additional approval of the Foreign Investment Promotion Board.
A foreign company may choose from following formats:
The typical models followed in real estate sector are:
Find below the detailed guidelines for developing a real estate project with a foreign company:
The area requirements for Construction-development projects were reduced to built-up area of 20,000 sq. mts now from 50000 sq. mts earlier. At the same time, Minimum capitalization for wholly owned subsidiaries were reduced to US$ 5 million now from US$ 10 million earlier.
Now, with these relaxations, it gives large as well as small scale developer an opportunity to develop realty projects jointly with foreign companies. The level of partnership between an Indian developer and the foreign company can be financial, technical, or both.
Indian real estate developers in partnership with foreign companies can undertake the development of township, group housing complexes, office space premises, retail buildings, roads & bridges. The FDI in the sector is permitted through the automatic route, i.e. without requiring the additional approval of the Foreign Investment Promotion Board.
A foreign company may choose from following formats:
- Wholly owned subsidiary
- Branch office
- Project office
- Liaison office
- Joint venture
The typical models followed in real estate sector are:
- Private equity capital
- Joint venture company
- Joint development agreement
Find below the detailed guidelines for developing a real estate project with a foreign company:
Have any Questions? Tweet to @sach_gupta
