Jul. 13 – The Department of Industrial Policy and Promotion is studying a proposal to allow foreign real estate companies to repatriate all their profits except the minimum initial investment of US$5 million.
This will apply to foreign companies in a joint venture with a local developer and will effectively limit India’s lock-in period for real estate investment to only apply to the initial US$5 million. It will do away with a previous DIPP rule announced last year that forbade repatriating profits after less than three years of completing capitalization.
This means that a foreign investor placing a US$500 million investment in real estate may now be allowed to repatriate as much US$495 million even after less than three years after market capitalization while the minimum investment balance of US$5 million may only be repatriated back after three years.
“The change will not warrant any tweak in the policy but a mere notification,” a DIPP official said.
“If the government maintains the spirit of the original Press Note and allows foreign players continue investing in the way they have been doing for the last five years, it would reinstate their confidence in the real estate sector. At a time, when realty sector is reviving in India, the proposed move may instill their confidence in the realty sector,” said James Mathew, Ansal API marketing and brand head.
The DIPP is also considering lowering the minimum area required to develop townships in the country.