The Government of India delayed the decision on soothing Foreign Direct Investment (FDI) guidelines in the real estate sector including easing conditions for exit of the foreign investors before the three year lock-in-period.

It was proposed to amend the current requirement of having minimum 50,000 sq mts of build up area to 20,000 sq mt for FDI in construction projects. The Urban Minister Kamal Nath suggested for the delay of the proposal in front of the cabinet.

The Cabinet had also suggested a minimal capitalization of USD 5 million for both joint venture and wholly owned arm with Indian partners from existing USD 10 million. The note also demanded to decrease the land requirement for housing project from 10 hectares to 5 hectares as there is a shortage of land and the cost is too high.

The foreign investors need to bring their whole amount with in six months of beginning of the project. The start point of the project will be the date on which the approval for building plan is given by the regulatory officials.

At present, 100 pc FDI is allowed trough automatic route which includes development of townships, housing units, commercial premises, hotels, hospitals, educational institution, and regional constructions in the reality sector.