Govt serious on FDI in real estate: Jaipal Reddy

Mumbai, Sep 21 (UNI) Union Minister for Urban Development Jaipal Reddy today said that the Union government will seriously look into the possibility of permitting Foreign Direct Investment (FDI) in real estate sector.

In his innagural address to the members of the real estate industry at the two-day 'International Real Estate Summit' organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) that began here, Mr Reddy reiterated that the issue of foreign investment will be taken up seriously at the cabinet level and the government was open to FDI with transparency.

He also urged the Maharashtra government to urgently do away with the Urban Land Ceiling Act, to augment smooth investment and development of real estates in the city.

Highlighting the importance of the unique Jawahar Lal Nehru Urban Renewal Mission (JLNURM), he said, growth rates in the urban sector will continue to shoot up and 40 per cent of the population will move to urban India by 2025.

He said that JLNURM is different from all other schemes as about Rs 50,000 crore will be given by way of grant in the next six years.

This will also prompt the urban local bodies to create a fund of similar size.

However, he emphasised that this amount will be released only when certain conditions are met by respective state governments such as scrapping of the Urban Land Ceiling Act in totality, simplification of rent control laws in the interest of the land owners and tenants, and lowering of stamp duties to at least five per cent.

Assuring the members of the induatry, Mr Reddy assured that the economic growth of eight per cent will continue to grow for another five years.

States should be encouraged to go for legislation where buyers can be guaranteed a clear piece of land with clear titles, he added.

Speaking on the occasion, FICCI President, Saroj Kumar Poddar said that real estate sector contributed about 14 to 15 per cent of national Gross Domestic Product (GDP), currently estimated at 12 billion dollar and is growing at 30 per cent annually. FICCI President highlighted the complicated nature of the Urban Land Ceiling Act which needs to be repealed by few more states, the cumbersome land transactions and the lengthy and arduous procedure to procure land for real estate projects, absence of well developed land markets, unclear land titles and high cost of land which make cost of most projects uncompetitive.

He strongly urged for rapid reforms in areas known as benchmark for global best practices. Lengthy processes in getting clearances and approvals for housing and real estate projects, he said, are the major reasons for low transparency in Indian real estate market.

UNI