By Mr. Anuj Puri,
Chairman & Country Head, JLL India
The government’s
decision to relax FDI rules in the construction sector literally comes in the
nick of time for Indian real estate. During the current fiscal year until
August, 2014 India has received FDI inflows worth USD 1740 cr, or 70 % of the
total inflows received during the entire fiscal year of 2013-14.
However, FDI inflows
received by the Construction, Housing and Real Estate segment do not reflect
the same sentiment.
The sector’s share in
the total FDI has further slipped from 5% in the previous year to under 3% as
of the current fiscal until August, 2014.
In fact, its share
has been consistently falling over the last 6 years since 2009 -10, when it
stood at over 20 %. Meanwhile, developers continue to reel under high levels of
debt, even as the channels of funding have shrunk.
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| Anuj Puri, Chairman & Country Head, JLL India |
The announcement has
taken into consideration the proposals made by the DIPP. There has been a
relaxation in norms related to built-up area, capitalisation and lock-in
period.
Minimum built-up area
has been reduced to 20,000 square metres from 50,000 square metres, and minimum
capitalisation has been halved to $ 50 lakh from $ 1 crore. The easier rules
will help faster completion of projects delayed by a squeeze on funds due to
elevated debt levels.
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