Business Group Recommends Changes to FDI Real Estate Rules
Sept. 16 – India should revise its regulations on foreign direct investment in the real estate sector to liberalize the industry and streamline the approval process for projects according to a study by the Federation of Indian Chambers of Commerce and Industry and Ernst & Young.
The study, scheduled for release today, also recommended that changes be made to FDI rules that will allow investors to avail of an early exit instead of the current three year lock-in period as long as it is duly approved by the Foreign Investment Promotion Board. Moreover, investors should be allowed to exit if the project lacks statutory clearances.
The study called “Realty Decoded: Investing Across Borders” recommended sweeping changes to the following:
- Creation of a regulatory body for real estate
- Infrastructure status applied to affordable housing
- Permitting real estate mutual funds/real estate investment trusts
- Modifications in FDI guidelines for early exit and affordable housing
- Streamline project implementation and delivery
India needs to improve its regulatory environment to attract more foreign investment and avoid being left behind by emerging economies like China, Brazil and Russia.
According to the study, housing and real estate projects in India can take as long as two years and need 52 approvals to push through.
FCCI Secretary General, Dr. Amit Mitra said in a statement: “The recovery in Indian real estate has come primarily on the back of a strong demand for residential real estate led by improved consumer confidence, economic recovery and improved job opportunities.”
“With projections of over 8 percent growth expected this fiscal, investors are returning to India with greater confidence. The future of Indian real estate would significantly depend on investor friendly policies, clear and transparent regulatory framework for the sector,” he added.
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