The government on Monday widened the meaning of 'Real estate
business' under the foreign direct investment (FDI) policy which
now includes dealing in land and immovable property to earn
profit.
According to a Press Note of the Department for Promotion of
Industry and Internal Trade (DPIIT), it is clarified that FDI is
not permitted in an entity which is engaged or proposes to engage
in real estate business, construction of farm houses and trading in
transferable development rights.
It added that earning of rent/income on lease of a property, not
amounting to transfer, will not amount to real estate business.
"Real estate business means dealing in land and immovable property
with a view to earning profit there from and does not include
development of townships, construction of residential /commercial
premises, roads or bridges, educational institutions, recreational
facilities, city and regional level infrastructure, townships...,"
the note said.
FDI is prohibited in real estate business and construction of farm
houses, according to the Press Note.
Further the DPIIT has also made changes in the norms pertaining to
acquisition of shares under scheme of
merger/demerger/amalgamation.
The merged or new entity "may issue capital instruments to the
existing shareholders of the transferor company resident outside
India", the Note said.
"Where a scheme of compromise or arrangement or merger or
amalgamation of two or more Indian companies, or a reconstruction
by way of demerger or otherwise of an Indian company ...the
transferee company or the new company, as the case may be, may
issue capital instruments to the existing shareholders of the
transferor company resident outside India," it said.
This will be subject to certain conditions, it added.