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Shriram Properties
Source Name: Shriram Properties

Views of M Murali, Shriram Properties on FDI Relaxations Announced by the Governement

Oct 30, 2014   17:48 IST 

 “I would say this is an excellent positive announcement - the Government has made appreciating the contribution of construction sector to the economy and the nation as well. The economic growth will surely gain further momentum with easier funding norms for FDI. Easy and more money to the construction sector would mean - more jobs ! - More houses!. Needless to say the still faster growth of ancillary industries.

With relaxations like dropping the minimum 10-hectare rule for serviced housing plots, slashing the minimum floor area for construction development project to 20,000 sq m from 50,000 sq m to be eligible for overseas investment, halving the minimum FDI amount to $5 million from $10 million, easing the exit norms - there would be definitely more and easy foreign fund flows into the sector.

The existing rule of a three-year lock-in after the completion of minimum capitalization of $10 million is relaxed .This is a big attraction and incentive to foreign investors. Now the investor can exit on completion of the project or three years after the final investment of course, with the rider of completion of trunk infrastructure.

From the developers’ side, the new norms will definitely help the medium size developers who suffer from funds crunch to get easy funding.

As per the revamped policy, the sectoral condition of minimum area and capital will not apply if the developer sets aside 30% of the project for affordable housing, defined as dwelling units of less than 60 sq m .This is a booster for “affordable housing”.

In all, indeed a most welcome move by the Government to encourage more investors to consider investing in Indian construction sector. 

M Murali, MD Shriram Properties
M Murali, MD Shriram Properties
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