Real estate business

Government expands sense of real estate business under FDI policy

On Monday, the government broadened the meaning of “real estate” under the foreign direct investment (FDI) policy, which now includes the sale of land and real estate for profit.

According to a press note from the Department for the Promotion of Industry and Internal Trade (DPIIT), it is clarified that FDI is not allowed in an entity that carries on or proposes to carry on real estate activities, the construction of farms and trade in transferable goods. development rights.

He added that earning rent/income on the rental of a property, not constituting a transfer, will not constitute a real estate business.

“Real estate business means dealing in land and real estate with a view to profit and does not include the development of townships, the construction of residential/commercial premises, roads or bridges, educational institutions , recreational facilities, infrastructure at the level of the city and the region, cantons…”, said the note.

FDI is prohibited in real estate business and construction of farms, according to the press release.

In addition, the DPIIT has also made changes to the standards relating to the acquisition of shares under a merger/demerger/merger regime.

The merged or new entity “may issue capital instruments to existing shareholders of the transferring company residing outside India,” the memo said.

“Where a plan of compromise or arrangement or amalgamation or amalgamation of two or more Indian companies, or a reconstruction by way of division or otherwise of an Indian company … the transferee company or the new company, as the case may be, may issue equity instruments to existing shareholders of the surrendering company residing outside India,” he said.

This will be subject to certain conditions, he added.

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