NRIs: A crucial element

Non-resident Indians (NRIs) have played a crucial role in the development of the Indian real estate market. Opening-up of the economy in 1991 offered them new opportunities. Since 1994, NRIs have invested a sizeable amount, of which a big chunk has found its way into the property market. Participation by NRIs as investors in the past has infused a necessary element which deprived the market completely in the pre-1991 period. Of late, the sector is trying to get its acts together.
 
But it will take some time before things really start looking up. The Indian realty business is still not very much organised and that makes things rather difficult for those who are not much familiar with the intricacies involved. In the past two years, NRIs have not shown enough interest in the market. Reason - The market has failed to offer the transparency that the NRIs are looking out for. Nobody would like to invest in an unsecured condition. In the wake of frequently changing laws, NRIs often fail to take advantage of the emerging opportunities that the market offers of late.
 
NRIs need to keep themselves abreast with various details as regards the Foreign Exchange Regulation Act, 1973 (FERA), Stamp Duty Act, Registration Act, and direct taxes, etc.

Non Resident Indians are now permitted to enter into the business of real estate development. This can be done by either forming a partnership firm or investing in a company incorporated in India. The Reserve Bank Of India has relaxed certain provisions with regard to investment in Indian companies engaged in housing and real estate development.
 
Persons of Indian nationality/origin resident outside India (NRIs) are permitted to invest upto 100 percent in the new issues of equity shares/convertible debentures of Indian companies engaged/proposing to engage in the following areas :

• Development of serviced plots and construction of built-up residential premises
• Real estate covering construction of residential and commercial premises including business centres and offices
• Development of township
• City and region level urban infrastructure facilities including roads and bridges
• Manufacturing of building materials
• Financing of housing development