FDI route facilitates more real estate investment

India can be acknowledged as one of the fastest growing economies in the world and real estate has emerged as one of the most appealing investment areas for domestic as well as foreign investors.

This high growth curve in the real estate sector owes some credit to a booming economy and liberalized foreign direct investment (FDI) regime in the real estate sector. Until now, only non-resident Indians (NRIs) and persons of Indian origin (PIOs) were permitted to invest in the housing and the real estate sectors. Foreign investors other than NRIs were allowed to invest only in the development of integrated townships and settlements either through a wholly owned subsidiary or through a joint venture company in India along with a local partner.

The FDI policy allows up to 100% investment under automatic route in townships, housing, built-up infrastructure, and construction-development projects. Since the liberal policy was adopted by the government, real estate has become a lucrative field for international players to make 100% investments. The development of special economic zones (SEZ) in India has further favoured the growth of the Indian real estate market. The market is thus moving towards maturity offering a wide scope for local and international realtors.

Gautam Khaitan is a partner at OP Khaitan & Co. He works mainly on corporate and commercial matters and has considerable experience over a wide range of corporate and commercial transactions.