How The New FDI Norms For Construction Sector Have Eased [Infographic]

Narendra Modi-led government, on the eve Diwali (November 10), eased foreign direct investment (FDI) norms, which brought cheer to as many as 15 sectors. One such sector is real estate in India, which witnessed the most relaxed norms for foreign investment, since the industry began opening up a decade ago.

The sector is set to get relief from the easing of FDI norms including limitations on capital, minimum area required, and lock-in period in construction development.

According to the government's release, "The crux of these reforms is to further ease, rationalise and simplify the process of foreign investments in the country and to put more and more FDI proposals on automatic route instead of government route where time and energy of the investors is wasted."

However, FDI will not be permitted in an entity, which is engaged or proposes to engage in real estate business, construction of farm houses, and trading in transferable development rights (TDRs), the government notification said.

The government has come up with the new definition of Real Estate Business. The statement by the Centre said, "Real Estate Business will mean as 'dealing in land and immovable property with a view to earning profit therefrom and does not include development of townships, construction of residential/ commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships. Further, earning of rent/ income on lease of the property, not amounting to transfer, will not amount to real estate business."

PropGuide lists the changed norms in the FDI policy, in contrast to the old norms, to give you a complete view of the changing picture.