DPIIT brings clarity to the FDI policy for realty sector
Real Estate

DPIIT brings clarity to the FDI policy for realty sector

The Department for Promotion of Industry and Internal Trade (DPIIT) has amended and widened the definition of ‘real estate business’ in its Foreign Direct Investment (FDI) policy. “Real estate bus...

The Department for Promotion of Industry and Internal Trade (DPIIT) has amended and widened the definition of ‘real estate business’ in its Foreign Direct Investment (FDI) policy. “Real estate business has been defined as businesses that deal in land and immovable property for the purpose of profit,” says Shishir Baijal, Chairman and Managing Director, Knight Frank India. It excludes township development, construction of residential and commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships and REITs registered and regulated under the SEBI (REITs) Regulations 2014. Further, earning of rent or income on lease of the property, not amounting to transfer, will also not amount to real estate business. FDI investments that lead to speculation in real estate have long been discouraged by the government in favour of investments that lead to development. While no changes are made, the press note provides greater clarity on the current policy.” FDI is not permitted in entities engaged in or are proposed to be engaged in farmhouse constructions and in the trade of transferable development rights (TDRs). Additional clarity has been provided for the norms regarding the acquisition of shares under schemes of merger, demerger or amalgamation. Merged or new entities are allowed to issue capital instruments to the existing shareholders of the transferor company residing outside India.  

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