Latest Property News on 'Foreign Direct Investment in India'

Indian HNIs Make Realty Investment in India

The Indian HNI (high net worth individual) is being aggressively wooed by foreign developers . With the balance of economic power shifting towards Asia, and with India projected to be the world’s third largest economy by 2050, and a subsequent increase in the number of wealthy individuals, property consultants from across the globe are making a sales pitch, and also getting the HNI segment interested enough to buy.

HNIs are people with net financial assets (liquid assets) of at least $1 million, excluding primary residence and consumables. Data from consultants like Cap-Gemini and Merrill Lynch suggests that India has the youngest HNI population in the Asia-Pacific region, with the club having even 28-year-olds on their rolls. Read More »

GOVT Considers FDI in Real Estate

All said and done, the government is already on the right track by considering the hiking of income tax exemption available for interest payment on home loans to Rs 2.5 lakh a year. However, there are still a number of blanks to be filled. The Budget should make high-priority provisions for the laying down of necessary infrastructure so that new areas can be opened up. The concept would be to create and link-up satellite settlements to main cities that will help tackle the demand-supply mismatch.

The Budget should provide clarity on the STPI guidelines whether they will remain or not, or whether they have changed. The Budget should offer clarity on the introduction of a real estate regulator, since the fact that India is now a member of the global village makes higher levels for transparency imperative. This regulator may not necessarily decide on rates, but should put down firm principles in terms of property dealings and also quality parameters in terms of rating of constructions. Read More »

India the most attractive nation for Global Retailers

Providing good growth potential for global retailers amid the economic slowdown, India has emerged as the most alluring market for investment in the retail sector, surpassing the likes of China, Russia and the United Arab Emirates. India has been ranked as the most attractive nation for retail investment among 30 emerging markets by US-based global management consulting firm A T Kearney.

According to the entity’s Global Retail Development Index (GRDI), India is followed by Russia (2), China (3), United Arab Emirates (4) and Saudi Arabia (5). India was placed at the second spot last year. Similarly, the other four countries in the top five have improved their ranking, with the United Arab Emirates jumping 16 places from previous year’s 20th rank. Read More »

GOVT Plans Moves on FDI in Retail

Retailers, local and global, as well as private equity (PE) investors are closely tracking the new government’s moves on foreign direct investments (FDI) in retail. In a few weeks, plans are expected to get clearer to pave the way for the next round of fresh retail strategies. Currently, the cash-strapped sector is desperately seeking fresh funding and partnerships with foreign retailers. The sector is growing at around 15% this year, with value retailing bringing in most of the footfalls. The sector is through with its initial round of corrections after the initial euphoria a couple of years ago. Across the sector, companies have focussed on trimming fat where high cost structures and a competitive business landscape hurt bottomlines. Kishore Biyani, CEO of Future Group, is optimistic on this front and keen that the market opens up. “FDI has to happen. That is the next way to encourage big-ticket moves and push consumption in India,” he says.

Favourable demographics, upbeat consumer trends and changing lifestyles saw modern retailers growing at over 40% in the past few years. Initial concerns over foreign retailers having an edge over local retailers have worn off and partnerships seem to be the way ahead. In 2006, the government gave its nod to 51% FDI in single-brand retail and may now okay 100% FDI in single-brand and partial FDI in multi-brand retail, according to government officials familiar with the development. “We are, at the moment, neutral about it. We have a good arrangement with Woolworth. Maybe, the new government will encourage some developments on this front,” said Ajit Joshi CEO of Tata’s Infiniti Retail which owns durable retail chain, Croma. Read More »

UPA’s Second Round Can Benefit Realtors

Formation of a stable government at the centre is good news for economy, and for real estate sector as well. On top of that, the mandate for continuation of the Manmohan Singh government without too many constraints, this time round, as opposed to the last term when it was hemmed in by the powerful Left allies, will provide further fillip to growth, say consultants, developers and economists. The relative freedom of the government to manoeuvre this time, visa-vis its small allies, will enable it to take pro-market measures, which it could not earlier because of the opposition from its Left allies and other parties on whose support it was dependent for its survival. But with a clear mandate now, CMD of Parsvnath Group Pradip Jain says the country will come out stronger from the present economic crisis. His hopes emanate from the expectation that the government will introduce favourable policies for all the industries and sectors , which would help the country forge ahead. He says a stable government will inspire positive sentiments among the masses, which in turn would help in the overall growth.

Anshuman Magazine, CMD of CB Richard Ellis South Asia Pvt Ltd, says the outcome of the elections means continuity, stability, and hopefully the government would take faster and more aggressive decisions to stimulate the economy for a higher growth. This obviously will have a direct impact on the real estate sector. “We have already seen some movement in the realty market since last month and with these election results the sentiment will improve significantly, giving confidence to corporates/industry, investors, occupiers and the public at large,” he says. Industry feels that the new government will take special measures to bring down the interest rates further to enable the common man to buy houses. Reduction in the interest rates by two percentage points now will bring down the EMI on a similar earlier loan for 20 years by 13%. Read More »

Birla Group Plans to Sell Retail Stake to Private Equity Firms

The Aditya Birla Group, a $29-billion diversified conglomerate that operates in 25 countries, may sell a stake in its loss-making retail venture to private equity firms, as it looks to raise additional funds to scale up its fledgling retail business. Private equity players, such as Warburg Pincus, KKR and Goldman Sachs, are in talks with the group, which operates a retail chain under the More brand, said a person privy to the discussions. Chairman Kumar Mangalam Birla said the group was open to the idea of roping in financial investors, but declined to comment on specific discussions. “We are not looking at a strategic partner. We will be happy to have a financial partner. We have received lots of preliminary interest from investors. We would be open to this idea,” Mr Birla said in an interview.

His comments come amid confusion on the guidelines that govern foreign investment into the Indian retail sector. Although, foreign firms are not allowed to invest in multi-brand retail, government rules make it possible for them to pick up stakes in Indian retail companies at the holding company level. A few Indian retail groups have made use of this provision and created layered holding structures to rope in foreign investors. “But, I think guidelines should be clear,” said Mr Birla, referring to the company’s plans. Executives at KKR India and Warburg Pincus neither confirmed nor denied their firms’ interest in Aditya Birla Retail. Read More »

GOVT to Concentrate on Boosting FDI

Working out and unveiling a new Foreign Trade Policy, working out reforms to finetune the Foreign Direct Investment Policy (FDI), taking a call on opening up of the retail sector for foreign investment and giving a boost to the sagging exports are likely to be on top of the agenda of the new Commerce and Industry Minister who takes office in the new government. During the next few weeks, a five-year Foreign Trade Policy will need to be unveiled. The details of the policy are being finetuned now by the Directorate General of Foreign Trade (DGFT) in consultation with industry stakeholders. The focus would be on making Indian products competitive.

Official sources said that there could be further liberalisation of FDI norms that were notified in February this year and had raised a storm. “With China, Brazil and Russia welcoming FDI with open arms, attracting FDI has become competitive. There would be changes in the FDI norms so that foreign money inflow is made lucrative,” a senior official said. FDI inflows dropped in February to $1.4 billion, almost one-fourth of the inflows witnessed in the same period a year ago, under the impact of the global credit crunch. In February 2008, foreign investment was $5.67 billion which has left planners a bit worried. Read More »

ICICI struggling to get rid of its ‘foreign’ tag

The new guidelines on computing foreign investment in a company incorporated in India has opened a Pandora’s box in the banking sector, with the nationality of ownership of India’s largest private sector banks coming into question.

Seeking to clear the air on its ownership, ICICI Bank has written to the Department of Industrial Policy and Promotion (DIPP) saying that it is not a foreign-owned bank and it will not be covered by the new guideline, a person privy to the development said. Read More »

RBI raised concerns over new FDI Rules

Holding back clearance under the Foreign Exchange Management Act to the controversial FDI rules, the RBI has raised concerns over the new guidelines resulting in far-reaching changes in the ownership pattern of private banks.

As per the new guidelines, for the purpose of calculation of indirect foreign investment in an Indian entity, a sum total of FDI, stake from non-resident Indians, American and Global Depository Receipts, Foreign Currency Convertible Bonds and Convertible Preference Shares will be taken into account. Read More »

Finance Ministry not pleased with new FDI rules

The finance ministry has raised questions on the new foreign direct investment (FDI) rules announced earlier this year, which have driven many domestic firms to rework their ownership structure for attracting inflows in areas such as retail through the back door.

The department of industrial policy and promotion (Dipp) is examining the issues raised by the finance ministry, said a top commerce & industry ministry official on Friday. Dipp is the nodal agency for FDI guidelines in the country. Read More »