What Qualifies As A Real Estate Business Now?

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The flow of money across international borders is governed by numerous regulatory guidelines, unless you're carrying sacks of non serial number currency notes in a secret compartment under your vehicle. 

Jokes apart, when it came to Foreign Direct Investment (FDI) in Indian real estate, the guidelines on where overseas money could be deployed in the sector hasn't exactly been the hallmark of clarity. 

But Not Anymore

What changed: To bring more clarity in its FDI policy for the real estate sector - meaning how and where FDI may or may not be brought into a project - the government of India has amended and aligned the existing definition of the real estate business itself. 

Widening The View

Per the revised definition, 'a real estate business means dealing in land and immovable property with a view to earning profit therefrom.' You should know that FDI is not allowed for Indian real estate businesses. 

What's In: Construction of farmhouses and trading in transferable development rights. ❎ FDI Disallowed. 

What's Out: Development of townships, construction of residential/commercial property, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships etc. 

Also, earning of rent/income on lease of a property, not amounting to transfer, will not be considered as a real estate business. ✅ FDI Allowed. 

What It Means For Indian Realty

This is the easiest bit. Clarity and investments have a straight forward relationship - when definitions become crisper and clarity improves, so do investments from across borders.