New Delhi: The Narendra Modi government on Wednesday relaxed rules for allowing FDI in the construction sector, including housing, by reducing the minimum built-up area and capital requirement for foreign investment in such projects. The move will help ease the funds-crunch in the cash-starved realty sector.
The Union Cabinet on in its meeting decided to reduce the minimum built-up area requirement for FDI in construction projects from 50,000 sq metres to 20,000 sq metres. The minimum capital requirement has been brought down to $ 5 million from $ 10 million. In his Union Budget speech, Finance Minister Arun Jaitley had cited these proposals.
Although 100 per cent FDI is already allowed in townships, housing and construction, it comes with stringent conditions.
The Cabinet decision on Wednesday is in keeping with Prime Minister Modi’s reform agenda. He has revved up the liberalization drive to attract more overseas investors. With this objective in mind, the FDI cap in defence was hiked to 49 per cent from 26 per cent and 100 per cent FDI was allowed in railway infrastructure.
Between April 2000 and August 2014, construction development, including townships, housing and built-up infrastructure in the country, received FDI worth $23.75 billion or 10 per cent of the total FDI attracted by India during the period.
