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Govt mulls relaxation in realty FDI policy
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SME Times News Bureau | 12 May, 2020
The Ministry of Commerce and Industry is considering relaxation in the
foreign direct investment (FDI) policy for the real estate sector,
including 100 per cent FDI in completed RERA registered projects with
over 100 apartments, sources said.
According to market experts,
this - to allow FDI for completed apartments with occupancy certificates
- has been a long-standing demand. The consideration by the government
for further relaxation comes in the midst of the coronavirus crisis,
lack of business and the resultant liquidity crisis.
This will
allow real estate players to monetise their completed projects so that
focus could be diverted to complete pending housing projects that are
struck largely due to shortage of funds.
Secretary, Department
for Promotion of Industry and Internal Trade, Guruprasad Mohapatra, said
that there are always some policy considerations going on regarding
several sectors, but refused to comment on the proposed changes for real
estate.
Among other proposals, before the government is that 100
per cent FDI should also be permitted for completed warehouses, people
in the know of developments said. Though FDI is permitted in warehouses,
their are restrictions on bringing foreign money on running projects.
In fact, an overhaul of the FDI policy is on cards and the DPIIT is expected to come with various changes soon.
While
the government is looking to liberalise the FDI regime in reality
estate sector further, it is still not included to open overseas
investment in 'real estate business'. The restrictions on FDI in real
estate entities is also expected to continue for some more time.
As
per the Centre's Consolidated FDI Policy which came into effect in
August 2017, 'real estate business' means dealing in land and immovable
property with a view to earning profit there.
Shobhit Agarwal, MD
& CEO of Anarock Capital said: "In FDI, the main task has been to
allow FDI in fully built-up OC (occupancy certificate) ready apartments
so that developers can liquidate their holdings and put cash back into
circulation. Pre-Covid-19, this proposal had found little traction with
the government. Now, however, the government may revisit this proposal."
He
noted that there is a lot of available inventory and demand may remain
subdued because of the economic implications of the coronavirus pandemic
and viewing this, the proposal can have tremendous advantages which
will ripple across the economy.
Ankush Kaul, President, Sales
& Marketing at Ambience Group, said amidst the overall slowdown due
to the current lockdown, both commercial and logistics warehousing
facilities need strong impetus.
"RERA approved projects will have
a greater degree of pull among investors, making them profitable
investment avenues. Warehousing is already the strong asset class across
real estate, and has been doing well, even under the lockdown due to
the demand for various goods and services. These, if implemented, will
have a positive impact on the sector's growth, which is otherwise
struggling to generate liquidity, he said.
Samir Jasuja, Founder
& MD of PropEquity, however, was of the view that the approval for
100 per cent FDI in ready-to-move-in RERA registered projects would have
a limited impact as the number of completed projects is very low in the
country in comparison to the under-construction projects.
"It may have some impact on the ready-to-move-in luxury segment but that too is a very small market," Jasuja told IANS.
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