The Hindu : Business : `Allow repatriation to boost FDI in real estate'

Online edition of India's National Newspaper
Tuesday, May 24, 2005

Business

Business

`Allow repatriation to boost FDI in real estate'

Special Correspondent

Calls for regulatory framework and easier tax regime

NEW DELHI: The Federation of Indian Chambers of Commerce and Industry (FICCI) has called for a well-defined regulatory framework, an easier tax regime and a forward-looking foreign direct investment policy for the real estate sector.

Basing its views on feedback from players in the real estate sector after the Government has allowed 100 per cent FDI, it says this is needed to bring technical and managerial expertise in formulating and delivery of basic amenities like water, sanitation, sewerage, transport and electricity while boosting public-private partnerships for building affordable and qualitatively better housing units.

To encourage FDI, it suggests that repatriation should be allowed after three years from the completion of the minimum capitalisation or on the complete sale of the project, whichever is later and sought clarity on the basic definition of "built-up-area.''

According to FICCI the Tenth Plan has estimated a shortage of 22.4 million dwelling units. Thus, over the next 10 to 15 years, 80 to 90 million housing units will have to be constructed with a majority catering to the low income group. The investment required for constructing these and related infrastructure in this period would, thus, be of the order of $666 billion to $888 billion at the rate of about $33 billion to $44 billion annually.

A paper by the chamber underscores the crucial importance of the housing and real estate sector that has significant linkages with other sectors of the economy and over 250 associated industries. It says a unit increase in expenditure in this sector has a multiplier effect that generates income as five times as high. Further, estimates are that if the economy grows at 10 per cent, the housing sector would be propelled to grow at 14 per cent and generate 3.2 million new jobs over a decade. FICCI says the Indian real estate sector has traditionally lacked transparency and constitutes largely of unorganised players. However, it notes that certain regional players have now started focusing on gathering a larger national level presence, which is a catalyst for balanced overall development.

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