FDI push to Affordable Housing, a precursor to the second construction boom

ASSOCHAM welcomes relaxation of FDI norms in the construction sector, emphasizing that the new norms will boost the Government's ongoing efforts in creating smart cities. This will also help the development of new infrastructure and affordable housing.

The norms, targeting large infrastructure projects and affordable housing, will provide a major fillip to construction and infrastructure sectors. The new rules will result in removal of the minimum 10-hectare rule for serviced-housing plots; reduction of minimum floor area for construction projects eligible for overseas investment (from 50,000 sq m to 20,000 sq m) and also a reduction in minimum ticket size for FDI investment (from US$10mn to US$5mn).

Allowing 100% FDI will provide right impetus to the capital-starved housing and real estate sector, especially in tier II and tier III cities.

Reduction in minimum area to 20,000 sq m will enable development of relatively small land parcels in urban areas where large holdings are difficult to find.

Affordable housing and allied construction sectors including cement, steel, sanitary-ware and paints, among others, will receive a further boost.

Greater focus on social sector infrastructure, including healthcare, education and tourism, by providing access to FDI in segments like hospitals, old-age homes, educational institutions, hotels and resorts.

Relaxed exit norms based on completion of project or three years after investment will allay concerns of lock-in period and bring clarity on exit route for overseas investors.

ASSOCHAM strongly believes that the latest provisions of FDI in construction will not only trigger a construction boom in the country, while enabling enhanced job creation, but also act as a stepping stone towards realizing the aim of 'Housing for All by 2022'.

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