POTENTIAL FOR GROWTH
(FDI) in real estate sector in India
Real Estate sector is considered as a great employment generator and could be instrumental in growth of cement, steel and other connected industries. A study reveals that for every one crore (10 million) rupees of investment in housing, nearly 290 industries in the building material sector get activated besides the core manufacturing sector constituting cement, steel and bricks. Therefore, investment in housing is capable of achieving a three-in-one solution of employment generation, economic development and human development. Real estate development in India is estimated to be in the region of USD 12 billion, growing at a pace of 30 per cent each year. Almost 80 per cent of real estate developed is residential space and the rest comprise office, shopping malls, hotels and hospitals. This double-digit growth is mainly attributed to the off-shoring business, including high-end technology consulting, call centres and programming houses.
The FDI in the real estate is subject to the following conditions:
1. Minimum area to be developed under each project would be as under:
- In case of development of serviced housing plots, a minimum land area
of 10 hectares.
- In case of construction-development projects, a minimum built-up area of 50,000 sq.mts.
- In case of a combination project, any one of the above two conditions would suffice.
2. The investment would further be subject to the following conditions:
- The minimum capitalization shall be US$10 million for a wholly owned subsidiary and US$5 million for joint ventures with Indian partners. The funds would have to be brought in within six months of commencement of business of the Company.
- Original investment cannot be repatriated before a period of three years from completion of minimum capitalization. However, the investor may be permitted to exit earlier with prior approval of the Government through the FIPB.
