FDI in real estate

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The Foreign Direct Investment (FDI) Policy is laid down in the Consolidated Policy of 1st October 2010. (The policy has been there for the past few years. It is just that every 6 months, the Government comes out with a Consolidated FDI Policy which replaces the earlier Consolidated FDI Policy.) The FDI Policy has to be read with FEMA Regulations. The original policy was laid down vide Press Note 2 dated 3rd March 2005. In this policy, reference has been given to the Consolidated FDI policy or the original press note or FEMA regulation as relevant.

Non-residents are permitted to invest in Real Estate Development activity through Indian companies. Investment through LLPs, partnership firms, branch, or any in any other manner is not permitted. Direct business by non-residents is not permitted.

Non-residents can invest upto 100% of the equity capital of the Indian company. Investment is permitted on automatic basis.

Theme of the policy is that non-residents are not allowed to hoard or speculate immovable property. They cannot create “Land Banks” and hold them. At the same time, they are welcome to develop real estate.

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