Norms of ECB and FDI
FDI is not permitted in Real Estate Business. However, as per paragraph 6.2.11 of ‘Circular 1 of 2012 – Consolidated FDI Policy’ of the Department of Industrial Policy & Promotion (DIPP), FDI upto 100 per cent is permitted under the automatic route for Townships, housing, built-up infrastructure and construction development projects (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure), subject to certain conditions.
As per extant External Commercial Borrowings (ECB) policy, ECB is not permitted for real estate sector.
A representation from Confederation of Real Estate Developers’ Association of India (CREDAI) was received in the Ministry of Finance through the DIPP in December 2011. The said representation inter-alia requested for the following:
Government is not considering any further relaxation in FDI policy norms for the construction – development sector at this point of time. However, so far as ECB is concerned, Budget 2012-13 announced the provision of ECB for low cost affordable housing project.
This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Lok Sabha today.