THE MINISTER OF HOUSING & URBAN POVERTY ALLEVIATION (KUMARI SELJA)
(a) to (d): As reported by Reserve Bank of India, under the extant Foreign Exchange
Management Act, 1999 FEMA) Regulations, foreign investment in any form is prohibited in
real estate business or construction of farm houses. For this purpose, it is clarified that
“real estate business†does not include development of townships, construction of
residential/ commercial premises, roads or bridges, educational institutions, recreational
facilities, city and regional level infrastructure, townships.
Foreign Direct Investment (FDI) up to 100% under the automatic route is permitted for
development of townships, housing, built-up infrastructure and construction development
projects (which would include but not be restricted to housing, commercial premises, hotels,
resorts, hospitals, educational institutions, recreational facilities, city and regional
level infrastructure) subject to the following conditions :-
a. Minimum capitalization of US$ 10 million for wholly owned subsidiaries and US$ 5
million for joint venture. The funds would have to be brought within six months of
commencement of business of the Company.
b. Minimum area to be developed under each project- 10 hectares in case of development of
serviced housing plots; and built-up area of 50,000 sq. mts. in case of construction
development project; and any of the above in case of a combination project.
c. Original Investment cannot be repatriated before a period of three years from the
completion of the minimum capitalization. However, the investor may be permitted to exit
earlier with prior approval of Government through the Foreign Investment Promotion Board
(FIPB).
d. At least 50% of the project must be developed within the period of five years from
the date of obtaining all statutory clearances. The investor / investee company would not
be permitted to sell `undeveloped plots` i.e. where roads, water supply, street lighting,
drainage, sewerage, and other conveniences, as applicable under the prescribed regulations,
have not been made available. It will be necessary that the investor provides this
infrastructure and obtains the completion certificate from the local body / service agency
before he would be allowed to dispose of serviced housing plots.
e. The project shall conform to the norms and standards, including land use requirements
and provision of community amenities and common facilities, as laid down in the applicable
building control regulations, bye-laws, rules, and other regulations of the State
Government/Municipal/ Local Body concerned.
f. The investor/investee company shall be responsible for obtaining all necessary
approvals, including those of the building/layout plans, developing internal and peripheral
areas and other infrastructure facilities, payment of development, external development and
other charges and complying with all other requirements as prescribed under applicable
rules/bye-laws/regulations of the State Government/ Municipal/Local Body concerned.
g. The State Government/ Municipal/ Local Body concerned, which approves the building /
development plans, would monitor compliance of the above conditions by the developer.
h. The conditions as at sub paras a. to d. would not apply to Hotels & Tourism,
Hospitals and SEZ’s.
i. For investment by NRIs, the conditions at sub paras a. to d. would not apply.
j 100% FDI is allowed under the automatic route in development of Special Economic Zones
(SEZ) without the conditionalities at sub paras a. to d. above. This will be subject to the
provisions of Special Economic Zones Act 2005 and the SEZ Policy of the Department of
Commerce.
k. FDI is not allowed in Real Estate Business.
Details of investment received are given in Annexure.
(e) & (f): The information is being collected and will be laid on the table of the Sabha.
