Non-resident Indians (NRIs) with wealth stuck in real estate in India have reason to rejoice. They can now not only cash out on the property they hold in India but have also been provided an incentive to invest in real estate.

This has been made possible by the Reserve Bank of India allowing NRIs to remit the proceeds from the sale of immovable property. The RBI has lifted the 10-year lock-in as a step towards further liberalisation of the capital account.

“The key impact will be that it will provide an exit route to NRI investors, who till now did not have the comfort level to invest in property here as they could not repatriate the gains on account of the lock-in condition. For North America-based NRIs, who may not wish to come back to India, this will provide an opportunity to invest and exit as and when they choose to,” said Anshuman Magazine, head (South Asia), at CB Richard Ellis, a real estate consulting company.

The remittance of sale proceeds of immovable property is, however, within the overall ceiling of $1 million per annum.

Barring a few premium properties in Delhi and Mumbai, the Rs 4.5 crore cap would not be a hindrance in almost the entire Indian market for built-up homes and apartments, real estate analysts said.

Banks have been told to allow remittances out of balances in non-resident ordinary accounts, including sale proceeds of immovable property,

provided the amount does not exceed $1 million per financial year.

The analysts said NRIs who already own property in India, especially inherited titles, would be able to sell and possibly avoid messy family disputes and litigation.

Some analysts said the $1 million cap could possibly be circumvented through co-ownership of properties. “You can buy floors in a building and register them in separate names. In this way, an investor can repatriate multiples of the $1 million cap,” a real estate expert added.

Source: Business Standard
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  • Investment Policy for Overseas Investors

    Investment Policy for Overseas Investors

    Indian Government has come up with a liberal and transparent policy for Non Resident Indians (NRIs) interested to make considerable investments in India. Most sectors are open to Foreign Direct Investment (FDI) under the automatic route.

    According to fresh guidelines, NRIs can invest up to 100% under via automatic route in realty sector including development of commercial as well as residential property. They can also entertain their interest in the development of townships, city and regional level urban infrastructure amenities including roads and bridges.

    NRIs can also pump in money in Indian companies engaged in Air Taxi operation. For foreign companies, FDI is allowed only up to 49%. Furthermore, they can also invest in different activities under Foreign Exchange Management Act (FEMA) Regulations in the activities such as mutual funds, PSU Bonds.

    The list of privileges for the NRIs does not just end here. India has much to offer them. Now, NRIs are also permitted to invest up to 100% equity in partnership concerns whereas the foreign companies are not allowed to entertain their interests through such route.

    Next to come are Portfolio Schemes under which NRIs are permitted to invest in high priority in shares and debentures through secondary market purchase from the stock exchanges. However, there is an investment limit for the share at 5% whereas it is 10% for the debentures which is much high than the foreign investors portfolio investment limits.

    This step is taken as a bid to attract good investments by NRIs. However, it certainly seems to be a time to rejoice for our NRI friends who stay across seven seas but are still rooted to their motherland. :)
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  • Result of this liberalisation

    All these encouraging policies for NRI have no doubt given a boom to foreign investments in Indian real estate sector. But at the same time this is one of the important reason, as I think, that have given the present hike to real estate prices in some of the important locations in India.

    This simply has created a competition in front of Indians with limited incomes in comparision to NRI 's foreign earnings. As a result of sky touching prices of property, it has become difficult for an average Indian to think of buying a piece of immovable property specially in good locations (which I would say has been captured by non resident Indians!!)
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