Construction, realty get FDA manna

It’s not that foreign players are not present in India now. “They may get more leeway now. If the final guidelines are properly framed, we can see dramatic changes in the sector,” said a Mumbai real estate tycoon.

“Now developers who are looking to enter small projects can also come in. A host of South East Asian developers and Dubai developers are eyeing India. Emmar Group of Dubai has alread tied up with a Delhi-based firm. There is a definite supply emphasis in the present policy and the government’s aim is to translate the investments into brick and motor,” said Tanaji Chakrabarty, head of India Property Research.

But the land area limitation of 100 acres has been a sore point with developers and foreign investors. As a result, FDI has only trickled into the sector despite the marginal opening a couple of years ago. Bringing it down to the 25 acre (10 hectare) limit or 50,000 sq mt built-up area is a radical step and may spur a large amount of proposals and consequent funding.

Said A.M. Naik, Managing Director, Larsen & Toubro, “I have to look at the fine-print. There could be problems like labour issues. In construction and real estate, labour is a big factor. Foreign firms which have already come in are just overseeing the projects after sub-contracting them to local firms.”

FDI in real estate will now be through the automatic route and not through the Foreign Investment Promotion Board. The government will also soon announce its decision to relax FDI norms in the construction sector. The foreign players’ ivolvement will happen in satellite townships and small and medium towns, realty circles said.

According to Dr R.J. Aeren, Vice-Chairperson, R.J. Aeren Group, a decision in this regard has been long overdue. “This is a welcome first step in this direction and if followed by similar relaxation in other retail sectors, will contribute to rapid positive growth in construction and give further boost tothe economy. The minister’s initiative is a clear indication of the better things to come,” he said.

“It will seed the growth of integrated townships, with adequate, state-of-the-art housing and utility, social and economic infrastructure. When a housing settlement is supported by sufficient commercial and social infrastructure this will lead to better planned and sustainable human settlements and will find users almost as soon as it is ready,” said V. Suresh, former Hudco chairman. Meanwhile, real estate and construction stocks remained in the limelight on the BSE after the government move.