International Finance in Development of Integrated Township in India

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Summer Training Project Report 2009

“International Finance in Development of Integrated

Township in India”

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Project Introduction:

In India, Real estate is one of the fastest growths in different business sector. The popularity of Township is more and more. Many states have a policy regarding township development. Due to inadequacy of domestic fund foreign funds plays a significant role in funding in township development. Government also realizes that the importance of foreign funds it makes diff policy for acquiring foreign funds.

International finance plays a significant role in the development of Integrated Township in India. It is an integral part of the sources of funds for real estate Company’s who plans to developed Integrated Township. Advantages of foreign funds for township development can be enjoyed to full extent through various Government policies and international investment architecture.

The inflow of International funds helps the developing countries to develop a transparent, broad, and effective policy environment for investment issues as well as, builds human and institutional capacities to execute the same.

Government realize that the significant of foreign investment for the economic development of the country. So, it makes different policy for acquiring foreign funds, removes complexities and many restriction regarding foreign investment. Since 2003, 100% FDI for Integrated Township development under automatic route has been allowed.

Scope of the Study:

The topic of the study is “International Finance in development of Integrated Township in India”. The scope of the study would include:

Township developed in different states in India. International finance funds policy in India ( FDI,ECB) Housing & Real Estate (which include township, commercial

place, multiplex etc) FDI inflow in India.

Integrated Township:

Integrated townships have essentially been housing projects offering a combination of row houses, villas, bungalows and group housing—all with essential urban infrastructure and amenities— at differential price points to consumers. Today, townships have

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evolved to include all the ancillary facilities like commercial premises, hotels, recreational and retail services, along with other amenities. However, there is no standard definition of integrated townships from a regulatory standpoint.

Township is to be a self-contained town having all the modern civic amenities required by city – dwellers like power, water, roads, garbage management, hospital, school, parks, swimming pools, recreation centre, gym, ground for outdoor games, restaurant, hotel, shopping mall, cinema hall, auditorium, higher learning institute, transport facilities etc it would not depend on the Government for amenities.

As per Government definition "Integrated Township includes housing, commercial premises, hotels, resorts, city and regional level urban infrastructure facilities such as roads and bridges and mass rapid transit systems. Development of card and allied infrastructure forms an integrated part of township development."

William Rattazzi, CEO-Residential, Emaar MGF land, explain township as a place designed to create a lifestyle, taking into consideration all the needs of the end-user. And yes, they have to be sustainable — not just environmentally but also with respect to the fabric of the society. “They are the way for the future,” he

adds.

The township format, although it’s been around for a while, is still not a unified one across the country. This lack of common definition the size of integrated townships can vary from as small as only 25

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acres to some as large as 3,000 acres or more. It all depends on a developer’s ability to buy land and the rate at which he gets it. However, individual state governments and planning authorities have specified key prerequisites for a project to be called a township.

In Gurgaon (Haryana), Maharashtra and Bengaluru, the minimum area for a township project is 100 acres. Besides, there are other norms like minimum road width, percentage of land usage, etc specified by the authorities. Depending on size, a township project is expected to provide certain social infrastructure and ancillary facilities as well. For example, all townships must provide schools and basic medical care facilities, while those above 1,000 acres in size must provide a college as well.

Most of the township developer had taken loan from certain bank within India and foreign counties. Foreign Direct Investment (FDI) in India has registered growth in terms of both FDI flows in India and outflow from India. The FDI statistics and data are evident of the materialization of India as both a potential investment market for township construction planning, residential property, and commercial property, hotel projects, IT Park and investing country. To take foreign loans there are certain rules and policy to be followed by the developers through automatic route or approval route.

India top township city:

Property Samachar- India Real Estate News had published t some of the top 10 Integrated Township destination cities in India. These top integrated township destination cities of India are:

Bangalore Delhi- NCR Mumbai Lucknow Kolkata Jaipur

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Chandigarh Chennai Pune Panipat

Two main instruments to acquired foreign funds for Township Development:

Since the setting up of township in India many builders and developers had take foreign funds for building township. Foreign funds are gaining popularity in many of builders and developers in India. In order to get foreign funds there are two main types of instrument which are to be followed by builders and developers. The two main instruments are ECB and FDI:

ECB (External Commercial Borrowings):

External Commercial Borrowings (ECB) are defined to include commercial bank loans, buyers' credit, suppliers' credit, securitized instruments such as Floating Rate Notes and Fixed Rate Bonds etc., credit from official export credit agencies and commercial borrowings availed from non-resident lenders with minimum average maturity of 3 years.

Eligible borrowers can raise ECB from internationally recognized sources such as (i) international banks, (ii) international capital markets, (iii) multilateral financial institutions (such as IFC, ADB, CDC, etc.,), (iv) export credit agencies, (v) suppliers of equipment, (vi) foreign collaborators, and (vii) foreign equity holders (other than erstwhile Overseas Corporate Bodies).

Indian companies registered under the Companies Act, 1956 are permitted to raise ECBs up to US $ 500 million from reputed lenders in any one financial year (April to March). Financial intermediaries like banks, financial institutions, housing finance companies, NBFCs, Trusts, Non-Profit making Organizations (NPOs), Proprietorship/Partnership Concerns and Individuals are not eligible to raise ECBs under automatic route.

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ECB Policy for the purpose of developing Integrated Township:

Amount and maturity:

Corporate can avail of ECB of an additional amount of USD 250 million with average maturity of more than 10 years under the approval route, over and above the existing limit of USD 500 million under the automatic route, during a financial year. Other ECB criteria, such as end-use, recognized lender, etc. need to be complied with. Prepayment and call/put options, however, would not be permissible for such ECB up to a period of 10 years.

The ECB Policy Changes:

1) RBI had withdrawn the exemption accorded to the development of integrated township as a permissible end-use of ECB. It has been decided to permit corporate engaged in the development of integrated township, as defined in Press Note 3 (2002 Series) dated January 04, 2002 issued by the Ministry of Commerce & Industry, to avail of ECB under the Approval Route of RBI.(May 2007)

2) The ECB Policy was modified in May 2008 to allow the infrastructure companies to raise up to $100 million from overseas markets at comparatively lower interest rates. (May 2008).

3) The previous limit of USD 20 million for Rupee expenditure for permissible end-users under the Approval route was hiked to USD 50 million. (May 2008).

4) Considering the huge funding requirement in infrastructure sector, the borrowers in the infrastructure sector were allowed to raise up to USD 500 million per year from previous USD 100 million, under the Approval Route.(September 2008)

5) The definition of ‘Infrastructure’ sector was expanded to include’ mining, exploration and refinery’ sector. Therefore, the infrastructure sector will be defined in the ECB policy as 1) power 2) telecommunication 3) railways 4) road including bridges 5) sea port and airport 6) industrial parks 7) urban infrastructure (water supply, sanitation and sewage projects) 8) mining, exploration and refining.(October 2008).

6) The RBI allows ECB in real estate projects involving integrated townships of 100 acres or more. In real estate projects, a large portion of money is required for land acquisition, which is classified as working capital. But end-use restrictions like not

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allowing ECB money to be used for working capital take away its attractiveness.

Eligibility:

The minimum area to be developed should be 100 acres subject to local rules. In the absence of local rules and bye-laws at least 2,000 dwelling units for a population of 10,000 needs to be built. Integrated township includes housing, commercial premises, hotels, resorts and city and regional level urban infrastructure.

RBI had permitted real estate companies to raise funds through ECB window for integrated townships late last year to boost activity in the housing sector and fight domestic credit crunch. On review of the prevailing condition, it has been decided to extend the permission up to December 31, 2009, under approval route. The credit market had been tight since the fall of US investment bank Lehman Brothers past September 2008. But none of the domestic real estate players looked at the ECB option to raise funds after RBI eased the norms. DLF is possibly the first player in the real estate space to explore this route.

FDI (Foreign Direct Investment):

Meaning:

The simplest explanation of FDI would be a direct investment by a corporation in a commercial venture in another country. A key to separating this action from involvement in other ventures in a foreign country is that the business enterprise operates completely outside the economy of the corporation’s home country.

The definition of FDI originally meant that the investing corporation gained a significant number of shares (10 percent or more) of the new venture. In recent years, however, companies have been able to make a foreign direct investment that is actually long-term management control as opposed to direct investment in buildings and equipment.

Foreign Direct Investment (FDI) has been recognized as one of the important drivers of the economic growth of our country.

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Government has, therefore, been making all efforts to invite and facilitate FDI and investment from Non Resident [NRIs- which also includes Persons of Indian Origin (PIO)] to complement and supplement domestic investment.

Foreign Direct Investment in India is allowed through four basic routes namely, financial collaborations, technical collaborations and joint ventures, capital markets via Euro issues, and private placements or preferential allotments.

FDI Policy:

Foreign direct investment is freely allowed in all sectors including the services sector, except a few sectors where the existing and notified sectoral policy does not permit FDI beyond a ceiling. FDI for virtually all items/activities can be brought in through the Automatic route under powers delegated to the Reserve Bank of India (RBI), and for the remaining items/activities through Government approval. Government approvals are accorded on the recommendation of the Foreign Investment Promotion Board (FIPB).

Policy for Automatic route:

(a) New Ventures

All items/activities for FDI/NRI investment up to 100% fall under the Automatic route except the following:

(i) All proposals that require an Industrial License which includes:

(a) The item requiring an Industrial License under the Industries (Development & Regulation) Act, 1951;

(b) Foreign investment being more than 24 per cent in the equity capital of units manufacturing items reserved for small scale industries; and

(c) All items which require an Industrial License in terms of the locational policy notified by Government under the New Industrial Policy of 1991.

(ii) All proposals in which the foreign collaborator has a previous/existing venture/tie up in India in the same or allied field. (DIPP - Press Note No. 18 dated 14.12.1998 of 1998 Series)

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(iii) All proposals relating to acquisition of shares in an existing Indian company by a foreign/NRI investor.

(iv) All proposals falling outside notified sectoral policy/caps or under sectors in which FDI is not permitted.

Whenever any investor chooses to make an application to the FIPB and does not want to avail of the automatic route, he or she may do so.

Investment in public sector units as also for EOU/EPZ/EHTP/STP units would also qualify for the automatic route. Investment under the automatic route shall continue to be governed by the notified sectoral policy and equity caps and RBI will ensure compliance of the same. The National Industrial Classification (NIC) 1987 shall remain applicable for description of activities and classification for all matters relating to FDI/NRI investment:

RBI has granted general permission under Foreign Exchange Management Act (FEMA) in respect of proposals approved by the Government. Indian companies getting foreign investment approval through FIPB route do not require any further clearance from RBI for the purpose of receiving inward remittance and issue of shares to the foreign investors. Such companies are, however, required to notify the Regional office concerned of the RBI of receipt of inward remittances within 30 days of such receipt and to file the required documents with the concerned Regional offices of the RBI within 30 days after issue of shares to the foreign investors.

For inward remittance and issue of shares to NRI up to 100 per cent equity also, prior permission of RBI is not required. These companies have to file the required documents with the concerned Regional offices of RBI within 30 days after the issue of shares to NRIs.

(b) Existing Companies

1) Besides new companies, automatic route for FDI/NRI investment is also available to the existing companies proposing to induct foreign equity. For existing companies with an expansion programme, the additional requirements are that:

i) Increase in equity level must result from the expansion of the

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equity base of the existing company without the acquisition of existing shares by NRI/foreign investors.

ii) Money to be remitted should be in foreign currency.

iii) Proposed expansion programme should be in the sector(s) under automatic route. Otherwise, the proposal would need Government approval through the FIPB. For this the proposal must be supported by a Board Resolution of the existing Indian company.

2) For existing companies without an expansion programme, the additional requirements for eligibility for automatic approval are:

i) They are engaged in the industries under automatic route.

ii) Increase in equity level must be from expansion of the equity base.

iii) Foreign equity must be in foreign currency.

3) The earlier SEBI requirement, applicable to public limited companies, that shares allotted on preferential basis shall not be transferable in any manner for a period of 5 years from the date of their allotment has now been modified to the extent that not more than 20 per cent of the entire contribution brought in by promoter cumulatively in public or preferential issue shall be locked-in.

4) The automatic route for FDI and/or technology collaboration would not be available to those who have or had any previous joint venture or technology transfer/trade mark agreement in the same or allied field in India.

5) Equity participation by international financial institutions such as ADB, IFC, CDC, DEG, etc. in domestic companies is permitted through automatic route subject to SEBI/RBI regulations and sector specific cap on FDI.

Procedure of Automatic Approval for New & Existing Companies:

The proposals for approval under the automatic route are to be made to the Reserve Bank of India in the FORM FC (RBI) (Paragraph 10B.2) form. In a major drive to simplify procedures for foreign direct investment under the ‘automatic route’, RBI has given

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permission to Indian Companies to accept investment under this route without obtaining prior approval from Reserve Bank of India. However, investors are required to notify the concerned Regional offices of RBI of receipt of inward remittances within 30 days of such receipt and will have to file the required documents with the concerned Regional office of the RBI within 30 days after issue of shares to foreign investors. This facility is available to NRI investment also.

Policy for Government Approval:

All activities which are not covered under the automatic routes cited above. Government approvals for FDI/NRI through the FIPB (Foreign Investment Promotion Board) shall be necessary. Areas/sectors/activities hitherto not open to FDI/NRI investment shall continue to be so unless otherwise decided and notified by Government. Any change in sectoral policy/sectoral equity cap is notified from time to time by the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy & Promotion.

For greater transparency in the approval process, Government has announced guidelines for consideration of FDI proposals by the FIPB. The guidelines are stated in Annexure-III. The sector specific guidelines for FDI and Foreign Technology Collaborations are stated in Annexure IV.

Procedure for obtaining Government Approval:

(i) All proposals for foreign investment requiring Government approval are considered for approval by the Foreign Investment Promotion Board (FIPB). The FIPB also grants composite approvals involving foreign investment/foreign technical collaboration.

(ii) For seeking the approval applications in form FC-IL for FDI other than NRI Investments and 100% EOU should be submitted to the Department of Economic Affairs (DEA), Ministry of Finance

(iii) FDI applications with NRI Investments and 100% EOU should be submitted to the Entrepreneur Assistance Unit (EAU) of Secretariat of Industrial Assistance (SIA), Department of Industrial Policy & Promotion.

(iv) Plain paper applications carrying all relevant details are also accepted. No fee is payable. The following information should form part of the proposals submitted to FIPB: -

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(a) Whether the applicant has had or has any previous/existing financial/technical collaboration or trade mark agreement in India in the same or allied field for which approval has been sought; and

(b) If so, details thereof and the justification for proposing the new venture/technical collaboration (including trade marks).

(v) Applications can also be submitted with Indian Missions abroad who will forward them to the Department of Economic Affairs for further processing.

(vi) Foreign investment proposals received in the DEA are placed before the Foreign Investment Promotion Board (FIPB) within 15 days of its receipt. The recommendations of FIPB in respect of project proposals involving a total investment of up to Rs. 6 billion are considered and approved by the Finance Minister. Projects with a total investment exceeding Rs. 6 billion are submitted to the Cabinet Committee on Economic Affairs (CCEA) for decision.

(vii) The decision of the Government in all cases is usually conveyed by the DEA within 30 days.

Eligibility for Investment in India:

A person resident outside India (other than a citizen of Pakistan) or an entity incorporated outside India, (other than an entity incorporated in Pakistan) can invest in India, subject to the FDI Policy of the Government of India. A person who is a citizen of Bangladesh or an entity incorporated in Bangladesh can invest in India under the FDI Scheme, with the prior approval of the FIPB.

Overseas Corporate Body (OCB) means a company, partnership firm, society and other corporate body owned directly or indirectly to the extent of at least sixty per cent by Non-Resident Indians and includes overseas trust in which not less than sixty per cent beneficial interest is held by Non-Resident Indians, directly or indirectly, but irrevocably. OCBs have been de-recognised as a class of investors in India with effect from September 16, 2003. Erstwhile OCBs which are incorporated outside India and are not under adverse notice of Reserve Bank can make fresh investments under the FDI Scheme as incorporated non-resident entities, with the prior approval of Government of India if the investment is through Government Route; and with the prior approval of Reserve Bank if the investment is through Automatic Route.

Prohibition on investment in India:

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i) Foreign investment in any form is prohibited in a company or a partnership firm or a proprietary concern or any entity, whether incorporated or not (such as, Trusts) which is engaged or proposes to engage in the following activities:

a) Business of chit fund, orb) Nidhi company, orc) Agricultural or plantation activities, ord) Real estate business, or construction of farm houses, or e) Trading in Transferable Development Rights (TDRs).

ii) It is clarified that “real estate business” does not include development of townships, construction of residential / commercial premises, roads or bridges educational institutions, recreational facilities, city and regional level infrastructure, townships. It is further clarified that partnership firms /proprietorship concerns having investments as per FEMA regulations are not allowed to engage in print Media sector.

iii) In addition to the above, investment in the form of FDI is also prohibited in certain sectors such as

a) Retail Trading (except single brand product retailing)b) Atomic Energyc) Lottery Businessd) Gambling and Bettinge) Business of chit fundf) Nidhi companyg) Trading in Transferable Development Rights(TDRs) h) Activities / sectors not opened to private sector investmenti) Agriculture (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisciculture and cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro and allied sectors) and Plantations (other than Tea Plantations)

Type of instruments:

i) Indian companies can issue equity shares, fully and mandatory convertible debentures and fully and mandatory convertible preference shares subject to pricing guidelines / valuation norms prescribed under FEMA Regulations.

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ii) Issue of other types of preference shares such as, non-convertible, optionally convertible or partially convertible, have to be in accordance with the guidelines applicable for External Commercial Borrowings (ECBs).Since these instruments are denominated in rupees, the rupee interest rate will be based on the swap equivalent of London Interbank Offered Rate (LIBOR) plus the spread permissible for ECBs of corresponding maturity.

iii) As far as debentures are concerned, only those which are fully and mandatory convertible into equity, within a specified time would be reckoned as part of equity under the FDI Policy.

FDI in Development of Integrated Township:

With a view to catalyzing investment in townships, housing, built-up infrastructure and construction-development projects as an instrument to generate economic activity, create new employment opportunities and add to the available housing stock and built-up infrastructure, the Government has decided to allow FDI up to 100% under the automatic route (In 2001, FDI in this sector was permissible with prior Government Approval (DIPP PN No.4 (2001 series) in townships, housing, built-up infrastructure and construction-development project (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure), subject to fulfillment of conditions prescribed in Department of Industrial Policy & Promotion Press Note No.2 (2005 Series) dated 03.03.2005.

“As on date, Central Government permitted setting up integrated townships at the following places:- 1) Gurgaon (Haryana), 2) Hyderabad (Andhra Pradesh)(two projects) 3) Mohali (Punjab), 4) Chennai (Tamil Nadu), 5) Bangalore (Karnataka), 6) Kolkata (West Bengal)”

Condition for development of Integrated Township:

1) The foreign company intending to invest, shall be registered as an Indian Company under Companies Act 1956 and will henceforth be allowed to take up land assembly and its development as a part of Integrated Township Development. All such cases would be processed by FIPB on the recommendation of Ministry of Urban Development & Poverty Alleviation and other concerned Ministries / Departments.

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Ministry of Urban Development & Poverty Alleviation will develop an exclusive cell to deal with such cases.

2) The core business of the company seeking to make investment should be integrated township development with a record of successful execution of such projects elsewhere.

3) The minimum area to be developed by such a company should be 100 acres for which norms and standards are to be followed as per local bylaws / rules. In the absence of such bylaws / rules, a minimum of 2000 (two thousand) dwelling units for about 10000 (ten thousand) population will need to be developed by the investor.

4) The investing Foreign Company should achieve clear milestones once their proposal has been approved.

5) Conditions regarding the use of land for commercial purposes, development charges, external development charges and other charges as laid down in Master Plan / Bylaws, preparation of layout and building plan, development of internal and peripheral development, development of other infrastructure facilities including the trunk services etc., will be the responsibility of the investor as per planning norms and standards on similar lines as those applicable to local investors. In the absence of such standards and norms, every State Government may decide their own conditions for which the Urban Development Plan Formulation and Implementation guidelines circulated by the Ministry of Urban Development & Poverty Alleviation may serve as a guiding principle.

6) Land with assembled area for peripheral services such as police stations, milk booths will be handed over free of cost to the Government / local authority / agency as the case may be.

7) The Developer will retain the lands for community services such as (i) schools (ii) shopping complex (iii) community centres (iv) ration shop (v) hospital / dispensary. These services will be developed by developer himself and shall be made operational before the houses are occupied.

8) The developer, after properly developing playgrounds, park, will make it available to the local authorities free of cost.

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9) The developer will ensure the norms and standards as applicable under local laws / rules.

10) Complete at least 50% of the integrated project within five years from the date of obtaining all clearances.

11) Do not repatriate original investment before three years from completion of minimum capitalization. Early exits require prior approval of the Foreign Investment and Promotion Board.

Advantages of Foreign Direct Investment:

Attracting foreign direct investment has become an integral part of the economic development strategies for India. FDI ensures a huge amount of domestic capital, production level, and employment opportunities in the developing countries, which is a major step towards the economic growth of the country. FDI has been a booming factor that has bolstered the economic life of India, but on the other hand it is also being blamed for ousting domestic inflows. FDI is also claimed to have lowered few regulatory standards in terms of investment patterns. The effects of FDI are by and large transformative. The incorporation of a range of well-composed and relevant policies will boost up the profit ratio from Foreign Direct Investment higher. Some of the biggest advantages of FDI enjoyed by India have been listed as under:

Economic growth- This is one of the major sectors, which is enormously benefited from foreign direct investment. A remarkable inflow of FDI in various industrial units in India has boosted the economic life of country.

Trade- Foreign Direct Investments have opened a wide spectrum of opportunities in the trading of goods and services in India both in terms of import and export production. Products of superior quality are manufactured by various industries in India due to greater amount of FDI inflows in the country.

Employment and skill levels- FDI has also ensured a number of employment opportunities by aiding the setting up of industrial units in various corners of India.

Technology diffusion and knowledge transfer- FDI apparently helps in the outsourcing of knowledge from India especially in the Information Technology sector. It helps in developing the know-how process in India in terms of enhancing the technological advancement in India.

Linkages and spillover to domestic firms- Various foreign

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firms are now occupying a position in the Indian market through Joint Ventures and collaboration concerns. The maximum amount of the profits gained by the foreign firms through these joint ventures is spent on the Indian market.

Disadvantages of FDI in India:

The disadvantages of foreign direct investment occur mostly in case of matters related to operation, distribution of the profits made on the investment and the personnel. One of the most indirect disadvantages of foreign direct investment is that the economically backward section of the host country is always inconvenienced when the stream of foreign direct investment is negatively affected.

The situations in countries like Ireland, Singapore, Chile and China corroborate such an opinion. It is normally the responsibility of the host country to limit the extent of impact that may be made by the foreign direct investment. They should be making sure that the entities that are making the foreign direct investment in their country adhere to the environmental, governance and social regulations that have been laid down in the country.

The various disadvantages of foreign direct investment are understood where the host country has some sort of national secret – something that is not meant to be disclosed to the rest of the world. It has been observed that the defense of a country has faced risks as a result of the foreign direct investment in the country.

At times it has been observed that certain foreign policies are adopted that are not appreciated by the workers of the recipient country. Foreign direct investment, at times, is also disadvantageous for the ones who are making the investment themselves.

Foreign direct investment may entail high travel and communications expenses. The differences of language and culture that exist between the country of the investor and the host country could also pose problems in case of foreign direct investment.

Yet another major disadvantage of foreign direct investment is that there is a chance that a company may lose out on its ownership to an overseas company. This has often caused many companies to approach foreign direct investment with a certain amount of caution.

At times it has been observed that there is considerable instability in a particular geographical region. This causes a lot of

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inconvenience to the investor.

The size of the market, as well as, the condition of the host country could be important factors in the case of the foreign direct investment. In case the host country is not well connected with their more advanced neighbors, it poses a lot of challenge for the investors.

At times it has been observed that the governments of the host country are facing problems with foreign direct investment. It has less control over the functioning of the company that is functioning as the wholly owned subsidiary of an overseas company.

This leads to serious issues. The investor does not have to be completely obedient to the economic policies of the country where they have invested the money. At times there have been adverse effects of foreign direct investment on the balance of payments of a country. Even in view of the various disadvantages of foreign direct investment it may be said that foreign direct investment has played an important role in shaping the economic fortunes of a number of countries around the world.

STATEMENT OF HOUSING & REAL ESTATE FDI INFLOWS:

By using April 2000 as base year, monthly wise FDI inflow in Housing and Real Estate from June 2008 – June 2009 are as follows:

Table - 1Housing & Real Estate (Including Cineplex, Multiples, Integrated Township & Commercial complex etc)

Amount FDI Inflows

(Amount in Million)

Percentage of total FDI inflows (In Rs)

(In Rs.) (In US$)

April 2000 – June 2008 154,385.46 3,745.32 5.56

April 2000 – July 2008 166,417.79 4,026.28 5.59

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April 2000 – August 2008 179,504.02 4,331.06 5.84

April 2000 – September 2008 179,686.24 4,335.06 5.56

April 2000 – October 2008 189,517.22 4,537.11 5.81

April 2000 – November 2008 189,517.22 4,537.11 5.81

April 2000 – December 2008 197,324.58 4,696.77 5.83

April 2000 – January 2009 217,936.02 5,118.85 6.20

April 2000 – February 2009 224,772.08 5,257.63 6.26

April 2000 – March 2009 237,828.28 5,512.49 6.45

April 2000 – April 2009 255,875.22 5,872.98 6.72

April 2000 – May 2009 265,833.77 6,078.17 6.80

April 2000 – June 2008 295,208.10 6,693.06 7.32

Total Inflow 2,753,806.00 64,741.89

Percentage covered by Housing and Real Estate sector from the total FDI inflows in India from June 2008 to June 2009.

(April 2000 is used as based year for every month)

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Note: The share of Housing and Real Estate has been increasing (except in September 2008) from the total inflows of FDI in India. From April 2000 – June 2008, total FDI inflow is Rs. 154,385.46 millions, it contribute 5.56% of total FDI inflows. But in June 2009 the total inflows are 295,208.10 and it covers 7.32% of total FDI Inflows.

*The above information is based on DIPP data.

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Sector wise FDI inflows from April 2000 – June 2009

Sl. No Sector Amount in Millions (Rs)

%age to total FDI inflows

1Service Sector

934,959.28 23.18

2 Computer Software & Hardware

406,577.34 10.08

3Telecommunications

317,198.97 7.87

4Housing & Real Estate

295,208.10 7.32

5Construction Activities

255,030.03 6.32

6Automobile Industry

163,799.91 4.06

7Power

149,073.87 3.70

8Metallurgical industries

118,558.02 2.94

9Petroleum & Natural Gas

110,797.01 2.75

10 Chemical( Other Than Fertilizers)

99,370.63 2.46

11Electical Equipments

77,365.75 1.92

12 Cement & Gyspum Products

74,307.17 1.84

13Trading

71,853.67 1.78

14Drugs & Pharmaceuticals

66,030.31 1.64

15Hotel & Tourism

65,549.80 1.63

16Ports

63,629.07 1.58

17 Information & Broadcasting ( Including Print Media

63,300.04 1.57

18Consultancy Services

59,919.25 1.49

19 Food Processing Industries

36,450.51 0.90

20Electronics

35,457.69 0.88

21 Miscellaneus Mechanical 33,707.06 0.84

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& Engineering Industriess22 Textiles( Including Dyed,

Printed)30,752.88 0.76

23Fermentation Industries

30,118.90 0.75

24 Hospital & Diagnostic Centres

27,797.26 0.69

25Mining

23,997.76 0.60

26 Paper Nad Pulp ( Including Paper Products)

18,672.81 0.46

27Sea Transportation

18,375.78 0.46

28Ceramics

17,511.77 0.43

29Industrial Machinery

15,764.12 0.39

30Education

14,847.01 0.37

31Rubber Goods

12,649.07 0.31

32Machine Tools

11,692.26 0.29

33 Diamond, Gold Ornament Agriculture Services

11,521.91 0.29

34 Medical And Surgical Appliances

10,369.63 0.26

35 Air Transport ( Including Air Freight)

9,629.23 0.24

36Non-Conventional Energy

9,142.80 0.23

37Agriculture Service

8,007.73 0.20

38 Printing Of Books ( Including Litho Printing Industry)

6,900.71 0.17

39 Soap, Cosmetics & Toilet Preparation

6,768.49 0.17

40Agiculture Machinery

6,649.12 0.16

41Glass

6,098.30 0.15

42 Vegetable Oils And Vanaspati

6,040.09 0.15

43 Commercial, Office & Household Equipment

6,011.95 0.15

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44Earth -Moving Machinery

5,749.34 0.14

45Fertilizer

4,507.34 0.11

46 Tea And Coffee (Processing & Warehousing Coffee & Rubber)

3,805.95 0.09

47 Railway Related Component

3,354.63 0.08

48 Photographic Raw Film And Paper

2,580.20 0.06

49 Retail Trading ( Single Brand)Sugar

2,063.83 0.05

50Sugar

1,836.64 0.05

51 Leather. Leather Goods And Pickers

1,663.26 0.04

52Industrial Instrument

1,376.36 0.03

53Timber Products

667.41 0.02

54Coal Production

624.80 0.02

55Dye Stuffs

601.74 0.01

56Scientific Instruments

511.44 0.01

57Glue And Gelatin

385.80 0.01

58 Boilers And Steam Generating Plants

238.67 0.01

59 Pime Mover (Other Than Electrical Generators)

178.30 0.00

60 Mathematical, Survehing And Drawing Instrument

50.45 0.00

61Coir

50.17 0.00

62Defence Industries

6.87 0.00

63Miscellenous Industries

195,224.97 4.84

Total4,032,941.23

Sources: DIPP (Ministry of Commerce and Industry)

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State wise Township development information:

Andhra Pradesh - Township Development

Project Name

Project Location Status Name of Developer Areas (Acres)

Aliens Valley Gachibowli, Hyderabad Ongoing Aliens Developers Pvt Ltd

Aliens Hub Shamshabad Road, Hyderabad

Upcoming Aliens Developers Pvt Ltd

350 accuired 1200 acres is expected to acquired.

Aliens Space Station I

Tellapur, Hyderabad Ongoing Aliens Developers Pvt Ltd

19

Aliens space Station II

International Airport, Hyderabad

Upcoming Aliens Developers Pvt Ltd

64 is planned & 39 has been procured

Aliens Elite Miyapur, Hyderabad Ongoing Aliens Developers Pvt Ltd

Indu City Bachupally, Hyderabad Upcoming Indu Projects Limited

90

Indu Skies Shamshabad Upcoming Indu Projects Limited

100

Gujarat – Township Development

Project Name Project Location Status Name of Developer Areas (Acres)Sahara City Homes

Near River Sabarmati, Ahmedabad

Ongoing Sahara Infrastructure & Housing

Haryana - Township Development

Project Name Project Location Status Name of Developer Areas (Acres)MVL Rivercity Yamunanagar Upcoming MVL Limited 124SMARTCITY Alwar Road, Bhiwadi Ongoing Smartcity

Developers Pvt Ltd 600 sites ranging 100,200,300 sq.yds

Escape Nirvana Country

Sector 50, Gurgaon Ongoing Unitech Group 300

Uniworld Resorts Sector 33&48, Gurgoan Ongoing Unitech Group 220Unitech Karma Gurgaon Ongoing Unitech Group 272

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LakelandHarmony - Nirvana Country

Gurgaon Completed Unitech Group 300

Ramprastha Greens

Vaishali, Ghaziabad Ongoing Ramprastha Builders no info

Ramprastha Meadows

NH 24 Bypass Ongoing Ramprastha Builders no info

Mayfield Gardens Gurgaon Completed Orchid Infrastructure Developers Pvt Ltd

330

Pioneer Park Gurgaon Upcoming Pioneer Urban 75Nirvana Country Gurgaon Completed Pioneer Urban 223South City II Gurgaon Completed Pioneer Urban 500Greenwood City Gurgaon Completed Pioneer Urban 120+Sahara Grace Gurgaon Completed Sahara Infrastructure

& Housing Centrum Park Sector 103, Gurgaon Upcoming Indiabulls Real

Estate Limited The Palm Drive Gurgaon Ongoing Emaar MFG CHD City Sector 45, Karnal Ongoing CHD Developes

Limited no info

Sushant City Karnal Ongoing Ansal API 350Green Valley Faridabad Completed RPS Group Savana Sector 88,Faridabad Ongoing RPS Group BPTP Parklands Faridabad Ongoing BPTP Limited Piyush City Palwal Ongoing Piyush Group Aquapolis Ghaziabad Ongoing Ansal API no infoSushant City Panipat Ongoing Ansal API 250Sushant City Kurukshetra Ongoing Ansal API 200Greenescape Sonepat Ongoing Ansal API 31Vatika City Central

Ambala Upcoming Vatika Infotech 170

Parsvnath City - Block-A

Sonepat Completed Parsvnath Developers Ltd

Parsvnath City Dharuhera

Dharuhera Completed Parsvnath Developers Ltd

Parsvnath Paliwal City

Panipat Ongoing Parsvnath Developers Ltd

Parsvnath City Karnal Upcoming Parsvnath Developers Ltd

Parsvnath City Kurukshetra Upcoming Parsvnath Developers Ltd

Parsvnath City Saharanpur Upcoming Parsvnath Developers Ltd

Parsvnath City Rohtak Upcoming Parsvnath Developers Ltd

DLF Garden City Panchkula Upcoming DLF Ltd 200Ramprastha City - Gurgaon Ongoing Ramprastha Builders 450

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The ViewSuncity Kaithal Sector-33, Kaithal,

HaryanaCompleted Suncity Project Ltd 125

Suncity Gurgoan Gurgaon Ongoing Suncity Project Ltd 140Suncity Rewari Rewari Upcoming Suncity Project Ltd 135Suncity Rohtak Rohtak Completed Suncity Project Ltd no infoSuncity Rohtak II Rohtak, Delhi Road Completed Suncity Project Ltd no info

Kerela - Township Development

Project Name Project Location Status Name of Developer Areas (Acres)Regal County Kochi or Cochin Upcoming Regal Projects

Karnataka – Township DevelopmentProject Name Project Location Status Name of Developer Area

s (Acre

s)Confident Atria Sarjapur, Bangalore Ongoing Confident Group BCIL Expanse Mysore Ongoing Biodiversity Conservation

India Limited Vakil Townscape Jigani, Bangalore Ongoing Vakil Housing Development

Corporation Vakil Hosur Hills Bangalore Ongoing Vakil Housing Development

Corporation Vakil Garden City Kanakapura, Bangalore Ongoing Vakil Housing Development

Corporation Brindavan Enclave Bikaner Upcoming Soul Space Projects Limited Teacher,s Town Sarjapur, Bangalore Complete

dConcorde Group

Concorde Homes Hosur Road, Bangalore Completed

Concorde Group

Concorde Garden City

Rajarakeshwarinagar Completed

Concorde Group

Concorde Garden City

Gulbarga Completed

Concorde Group

SVD Gardens Chandapura, Anekal Road

Completed

Nigama Developers

Sai Ashirwad Phase I Bangalore Completed

Nigama Developers

Sai Ashirwad Phase II Bangalore Ongoing Nigama Developers Primerose Bangalore Ongoing Nigama Developers

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S.R.R Exurbia Bangalore Ongoing SRR Homes Pvt. Ltd S.R.R Meadows – 2 Bangalore Ongoing SRR Homes Pvt. Ltd The Empyrean Bangalore Ongoing Fire Luxur Developers Pvt.

Ltd Silver Spings AB Bypass Road,

IndoreOngoing Fire Luxur Developers Pvt.

Ltd Global City Bangalore Ongoing Pathy Housing PvtSky City Hosur, Bangalore Ongoing Pathy Housing Pvt

Maharastra - Township Development

Project Name Project Location Status Name of Developer Areas (Acres)

Garodia Nagar Ghatkopar East Completed

Garodia Group

Aamby Valley City Mumbai Completed

Sahara Infrastructure & Housing

Sahara City Homes Wardha road, Nagpur Ongoing Sahara Infrastructure & Housing

106.65 acres

Hiranandani Palace Gardens

Pune Completed

Hiranandani Developers Pvt. Ltd

Veena Samruddhi Mumbai Upcoming Veena Developers Dwarka Chakan-Talegaon Road,

PuneOngoing Naiknavare Developers Pvt.

Ltd Yashopuram Pimpri-Chinchwad Link

RoadCompleted

Yash Promoters Builders

Yashomangal Pimpri-Chinchwad Link Road

Completed


Yashodhan Pimpri-Chinchwad Link Road

Completed


Madhya Pradesh - Township Development


Amrapali City Indore Ongoing Amrapali Group Parsvnath City Ujjain Ongoing Parsvanth Developers LtdParsvnath City Indore Ongoing Parsvanth Developers LtdTricone City Indore Khandwa Road,Indore Ongoing Tricone Projects India Ltd Indore Greens Indore Ongoing Emaar MFG Windsor Hills Gwalior Ongoing Assotech LimitedSahara City Homes Gwalior Ongoing Sahara Infrastructure &

Housing 106 acres

Sahara City Homes Indore Ongoing Sahara Infrastructure & Housing

88.51 acres

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DLF Garden City Indore DLF Ltd

Punjab - Township Development

Project Name Project Location Status Name of Developer Area (Acres)

Blue City Ajanala Road, Amritsar Completed Blue City Township & Colonizers Pvt

Sterling Blues Ajanala Road, Amritsar Ongoing Blue City Township & Colonizers Pvt

S.G. Enclave Majitha Road, Amritsar Completed Sharma & Ganagahar Builders & Colonisers Pvt. Ltd

S.G. Enclave – Phase I

Majitha Road, Amritsar Completed Sharma & Ganagahar Builders & Colonisers Pvt. Ltd

Global City Amritsar Upcoming Sharma & Ganagahar Builders & Colonisers Pvt. Ltd

Rajgadh Estates Birmi, Ludhiana Completed Munish Promoters & Developers Pvt.

Shubham Enclave Amritsar Ongoing Satish Estates Pvt. Ltd Nitesh Vihar Ludhiana Completed Satish Estates Pvt. Ltd Sector 90,91 SAS Nagar (Mohali) Completed Janta Land Promoters Ltd Shivalik City Kharar Landran Road Completed Shivalik Group Shakti Vatika Samana Completed Motia Developers Pvt. Ltd Shiv Shakti Vatika Barnala Completed Motia Developers Pvt. Ltd Motia Royal Estate Zirakpur Completed Motia Developers Pvt. Ltd Jalandhar Vihar Kapurthala Road,

JalandharCompleted PPR Infrastructure Limited

Greater Kailash Gurdaspur Completed PPR Infrastructure Limited Ansal Sushant City Ajmer Ongoing Ansal API 125Dream City Amritsar Upcoming Ambuj Realty Development

Limited International City Amritsar Ongoing Aeren Enterprises Private

Limited Queer City Ludhiana Upcoming Aeren Enterprises Private

Limited Residential Township Ludhiana Upcoming Eldeco Infrastructure &

Poperties Parsvnath Prideasia Chandigarh Ongoing Parsvanth Developers Ltd Parsvnath King City Rajpuria,Punjab Completed Parsvanth Developers

Limited Eldeco Township Jalandhar Upcoming Eldeco Infrastructure &

Poperties Sushant City Mansa Road, Bathinda Ongoing Ansal API 250Golf Links Mohali Ongoing Ansal API No info

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HBN Sunrise City Bathinda Ongoing HBN Homes Colonisers Pvt.Ltd

Fairlakes Sector 85, Mohali Ongoing Country Colonisers Private Limited

Hompton Court Ludhiana Ongoing Ansal API 16Orchard County Chandigarh Ongoing Ansal APIUniworld City Mohali Completed Unitech Group 325

Rajasthan - Township Development

Project Name Project Location Status Name of Developer Area (Acres

)Adinath City Ajmer Road, Jaipur Upcoming Patni Builders and

Colonisers Ltd Hiranandani Palace Gardens

Jaipur Upcoming Hiranandani Developers Pvt. Ltd

Prescon City Jodhpur Ongoing PresconPiyush NRI City Jaipur Ongoing Piyush Group Platinum Greens Jaipur Ongoing Subh Santosh Group Sushant Lok Jodhpur Ongoing Ansal API 250

bighasPiyush City Bhiwadi Ongoing Piyush Group Ansal Sushant City - I

Jaipur Ongoing Ansal API 500 approx

Ansal Sushant City - II

Jaipur Ongoing Ansal API 110 bighas

Sushant City Jaipur Ongoing Ansal API 12Vatika Infotech City Jaipur Ongoing Vatika Infotech 800Parsvnath Narayan City

Jaipur Ongoing Parsvnath Developers Ltd

Parsvnath City (Plot) Jodhpur Completed Parsvnath Developers LtdParsvnath City (Villa) Jodhpur Ongoing Parsvnath Developers LtdParsvnath City (Floor)

Jodhpur Ongoing Parsvnath Developers Ltd

Tamil Nadu - Township Development

Project Name Project Location Status Name of Developer Areas (Acres

)MARG Chennai Ongoing MARG Group Ltd

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SwarnabhoomiAdityaram Township Chennai Upcoming Adityaram Properties Pvt.

Ltd Estancia Chennai Ongoing Arun Excello Thillana Pallikarani, Chennai Ongoing Arun Excello Arihant Township Navalur Upcoming Arihant Foundations &

Housing Ltd The Ferns Off East Coast Road,

ChennaiOngoing Regaliaa Realty Ltd

Bollineni Hillside Mahabalipuram Road, Chennai

Ongoing BSCPL Infrastructure Ltd


Chennai Ongoing Hiranandani Developers Pvt. Ltd

Sahara City Homes Coimbatore Ongoing Sahara Infrastructure & Housing

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North Town Perambur, Chennai Ongoing Unitech Group 70

Uttar Pradesh - Township Development

Project Name Project Location Status Name of Developer Area (Acres

)Nitishree Shourya Puram

Ghaziabad Ongoing Nitishree Infrastructure Ltd

Hi Tech City Jaipur Ajmer Highway Ongoing Amrapali Group Sushant Taj City Agra Ongoing Ansal API 500+Sushant Golf City Lucknow Ongoing Ansal API 5000Sahara City Homes Lucknow Ongoing Sahara Infrastructure &

Housing 200

Sushant City Meerut Ongoing Ansal API 300+Sahara Grace Lucknow Ongoing Sahara Infrastructure &

Housing Megapolis Greater Noida Ongoing Ansal API 2504+Pushpanjali Meadows Delhi-Mathura Highway Ongoing Pushpanjali Constructions

Pvt. Ltd Pushpanjali Dwarika Delhi-Mathura Highway Ongoing Pushpanjali Constructions

Pvt. Ltd Golf Links NH 24, Ghaziabad Upcoming Landcraft Developers Pvt.

Ltd Techno Apartment Greater Noida Completed Himanshu Developers Ltd Bhagiratha Vihar Greater Noida Ongoing Himanshu Developers Ltd Express City Khekra, Baghpat Ongoing Himanshu Developers Ltd Omaxe Eternity Vrindavan Completed Omaxe Ltd 52Parsvnath Royale Floors

Lucknow Ongoing Parsvnath Developers Ltd

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Capella Uniworld City

Greater Noida Completed Unitech Group 100

Unitech Grande Noida Expressway Completed Unitech Group 347VISTARA NH-3, Agra, Mumbai

roadCompleted Suncity Project Ltd 150

Suncity Hi-Tech Ghaziabad Upcoming Suncity Project Ltd 1500Hi Tech City Mathura Upcoming Suncity Project Ltd 1500Jaypee Kosmao Green

Noida-Greater Noida Expressway

Ongoing Jaypee Group 35

Uttarakhand - Township Development


)Supertech Metropolis Rudrapur Ongoing Supertech Limited NRI Lake City Rudrapur Ongoing Samiah International

Builders Pvt. Ltd Eldeco Township Sitarganj Upcoming Eldeco Infrastructure &

Poperties Alliance City One Rudrapur Ongoing Alliance Nirman Limited

West Bengal - Township Development


)Uttorayan Chandmoni Tea Estate,

SiliguriOngoing Ambuj Realty Development

Limited Hiranandani Palace Gardens

Kolkata Upcoming Hiranandani Developers Pvt. Ltd

Durgapur Township Durgapur Upcoming DLF Ltd 95Harmony Kolkata Completed Unitech Group 8

Towers extend to 24 stories

Delhi - Township Development



Delhi Upcoming Hiranandani Developers Pvt. Ltd

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Sushant City Kundli, Ongoing Ansal API 250Sunshine County Kundli, Ongoing Ansal APIVatika India Next New Delhi Ongoing Vatika InfotechDLF Shivaji Marg New Delhi Upcoming DLF Ltd. 200

Westend Greens Completed Orchid Infrastructure Developers Pvt Ltd

400

States which does not have township

Mizoram

Manipur

Nagaland

Arunachal Pradesh

Tripura

Assam

Meghalaya

Sikkim

Jammu & Kashmir

Bihar

Chhattisgarh

Goa

Jharkhand

Orissa

Uttaranchal

Conclusion:

In India it can be seen that there are a lot of township being developed and completed in various states. Some states even have

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policy for integrated township in their state for example – Maharashtra had a policy of 100 acres to be minimum area for township project.Since developing a township is a big project most of the Builders and Developers in India had borrowed loans form foreign counties and within India. With foreign investment allowed in large integrated township foreign developers to be getting interest in such projects. According to recent Cushman & Wakefield report, integrated township has seen the highest attention from investor with 28% of private equity investment going to the sector last year. Foreign funds can be taken through ECB or FDI. In FDI, Indian companies getting foreign investment approval through FIPB route do not further clearance from RBI. However, such companies had to give a report within 30 days after issue of shares to the foreign investorsRBI had permitted real estate companies to raise funds through ECB for integrated township. Corporate engaged in the development of integrated township as defined in Press note 3 ( 2002 series) dated January 04, 2002issued by DIPP, Ministry of Commerce & Industry, Government of India are permitted to avail of ECB under approval route until June 2009. Om review of the prevailing conditions it has been extending to permission up to December 31, 2009. None of the domestic real estate player looked at ECB to raise funds after RBI eased the norms. DLF is possibly the first player in the real estate space to explore this route.In statement of housing & real estate FDI inflow from June 2008 to June 2009 using April 2000 as based year for every month, it can be seen that the FDI Inflow in real estate had been increasing month to month. In June 2008 FDI inflow is 5.56% which result a growth in 7.32% in June 2009. The increased on FDI inflow would result in economic growth, opportunities in trade, employment, knowledge transfer etc for the country. However, FDI can negatively affect the host country too.

Reference:

1) DIPP – Press Note 4 (2001 series), Press Note 3 (2002 series), Press Note 2 (2005), Press Note No. 2 (2006 series).

2) DIPP (SIA) – Manual on Foreign Direct Investment in India (2004).

3) RBI - A.P. (DIR Series) Circular No.71.

4) RBI - Master Circular No. 07/2009-10.

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5) www.dipp.nic.in

6) www.rbi.org.in

7) www.RealEstateIndiaOnline.com.

8) Different company website (For collecting their Township project information).

Documents

International Finance in Development of Integrated Township in India