Foreign direct Investment in India

Foreign firms investing basically in India is called as foreign direct investment. This investment happens basically through mergers and acquisitions and also by takeover. FDI bring fear in Indian marketers as they might lose their own say in the market. On the other hand arguments were also raised pro FDI as “If India can adopt most of the foreign Culture, then why not FDI?” On the other hand Bringing in FDI into India is purely a concern of time; Right time must be identified for effective functioning of FDI in India.

Foreign Exchange Regulation Act, 1973 was passed by Indira Gandhi government which came in to force on 1974. This was enacted to regulate the foreign exchanges in India. However it was later replaced by Foreign Exchange Management Act, 1999- which seeks the offenses relating to foreign exchange as civil offenses. Earlier in FERA some of the offenses were categorized as criminal offenses.

FDI in India

In India, real estate is basically involved in three sectors, namely “lending/leasing”, “Developing”, and the third one in a broad sense is “trading” which includes buying and selling of properties.

As per the consolidated FDI policy which came into force from April 5, 2013, persons other than NRI/PIO can invest in India with prior permission of Reserve Bank of India, RBI will make necessary arrangements after consulting with the Government of India. An NRI or PIO is not allowed to invest in a firm or proprietorship concern engaged in any agricultural/plantation activity or real estate business or print media. As far as foreign nationalities are concerned the rules are not that relaxed to invest for them into Indian real estate. Ministry of Commerce and industry is now and then issuing rules for the proper regulation of the foreign personals investment in Real estates. As of now foreign nationals can invest only with joint venture companies. Limited Liability Partnership (LLP) with FDI is not allowed to operate in India in the field of Real estate.

Chapter 6 of the consolidated FDI policy includes the restrictions on areas which the FDI is not permitted. This also includes real estate/ farm house firms & business.