DELHI: The National Real Estate Development Council (NAREDCO) today urged the Union Government to lower the minimum requirement for developers’ eligibility of Foreign Direct Investment in real estate sector. “This is necessary to bring in more FDI and create more jobs in the real estate sector in the country and help smaller developers meet their funding requirement,” says Sunil Mantri, Vice President of NAREDCO.
He suggested that the requirement for FDI eligibility should be brought down to Minimum built up area of 20,000 square meters and Minimum capitalization of USD 5 million. The present policy allow up to 100 percent FDI through automatic route as long as the conditions built-up area of at least 50,000 square meters and minimum capitalization of USD 10 Million are met.
Also, REIT to be allowed, which will get huge foreign investment, estimated at USD 10 billion in 3-5 years.
If the scope of the prevailing norms is examined, we find that for a minimum built-up area norm of 50,000 square meters, only big developers are getting benefited and small projects are suffering because of not getting FDI in their projects. At the same time tight liquidity position is prevailing in the domestic market. Moreover we see that small projects which have to go through rigorous process of approvals including Environment Clearances are not able to get FDI in their project because of builtarea requirement and minimum capitalization criteria. “Ultimately small projects are vanishing from the market which is adversely affecting the competition in the market and creating dominance position of big developers/companies which has sizable projects, Mantri pointed out. On the other hand, ECB norms for real estate projects are so stringent that not a single project during the last financial year was able to raise fund through that route.
Sunil Mantri feels there is urgent need to open our legal boundaries more to attract Capital in Housing Projects. Therefore, to cater the need of Housing industry and giving a boost to Indian Economy by way of generating the employment and increasing the demand of cement, steel and other ancillary products, some proactive actions needs to be taken”.
About NAREDCO (National Real Estate Development Council)
National Real Estate Development Council (NAREDCO) was established as an autonomous self-regulatory body in 1998 under the aegis of Ministry of Housing and Urban Poverty Alleviation, Government of India. The Indian housing and real estate sectors and the allied industries hailed the Establishment of NAREDCO, as the apex national body for the real estate industry and visualized it as a single platform where Government, industry and public would discuss various problems and opportunities face to face which would result in speedy resolution of issues. It was formed with the mandate to induce transparency and ethics in business and transform the unorganized Indian real estate sector into a matured and globally competitive business sector.
The National Real Estate Development Council strives to be the collective force influencing and shaping the real estate industry. It seeks to be the leading advocate of developing standards for efficient, effective, and ethical real estate business practices, valued by all stakeholders of real estate sector and viewed by them as crucial to their success. NAREDCO works to create and sustain an environment conducive to the growth of real estate industry in India, partnering industry and government alike through advisory and consultative processes.