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In a further relaxation in FDI policy, the Cabinet on Wednesday approved 100 per cent FDI under automatic route in the construction development segment, which includes townships, housing, built-up infrastructure and real estate broking services.
It also clarified that real estate broking services do not amount to real estate business and is, therefore, eligible for 100 per cent FDI under automatic route.
“The timing for this announcement is significant as the retail sector is poised to receive significant real estate supply in the near future.
“After a prolonged period of slowdown in the retail sector over the last few years, we saw strong comeback with developers and investors betting high on the sector,” said Pankaj Renjhen, Managing Director, Retail JLL India.
The retail sector, he said, saw significant increase in PE investments in 2016-17 indicating a significant growth in retail real estate in the coming years.
The announcement of 100 per cent FDI through direct route will open up India as a global retail market. Amit Modi, Vice-President, CREDAI – Western UP, said, “It’s a welcome step. Real estate was the only sector where players were demanding 100 per cent FDI. Not only will it bring clean money into the system, but it will also make way for the entry of some of the international trade practices into the Indian real estate market.”
According to sector estimates, the Indian retail segment is expected to touch $1 trillion by 2020, growing at an estimated compounded annual growth rate (CAGR) of 15 per cent.
Anuj Puri, Chairman, ANAROCK Property Consultants, said: “It’s clearly a great move at this moment; it will bring more investment, transparency and governance in the sector. Also, because of RERA, a number of foreign investors are showing interest in the sector, things would have been different if RERA was not introduced.”
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