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#GoBuild: India eases FDI rules in real estate construction sector

India has eased foreign direct investment rules for the construction sector making it easier for eager overseas investors to put money into building new hotels, houses and townships.

Under the new rules, announced Wednesday, foreign investment is now allowed in projects with a minimum built area of 20,000 square metres, down from a previous 50,000 threshold.

The minimum capital investment by foreign companies has also been halved to $5 million, the government said in a statement.

Prime Minister Narendra Modi wants to create 100 new “smart cities” across India by 2020. 

Experts say that is a goal that will not be achieved without foreign capital. 

India’s construction industry, worth an estimated $126 billion, attracted 11 percent of all foreign investment into the country between 2000 and 2013, the second highest of any sector, but the pace of investment has slowed in recent years.

India received $1.2 billion of foreign direct investment in the year to March 31 compared with $1.3 billion the previous year.

Between April and August this year, foreign investment totalled $446 million.

Decisions to open up land for development and the granting of various approvals typically lie with individual states and municipalities in India.

Previously, India allowed 100 percent foreign direct investment in real estate development but with strict conditions, including a lock-in period of three years during which the investment cannot be repatriated.

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