How do Indian state governments make money

FDI policy

Note:

(1) Foreign investment in any company that does or intends to conduct real estate business, build farmhouses, and trade in Transferable Development Rights (TDRs) is not permitted.

(2) The embargo condition does not apply to hotels and tourist locations, hospitals, special economic zones (SEZ), educational institutions, old people's homes and investments by NRIs / OCIs.

(3) The completion of the project will be determined in accordance with the local statutes / rules and other regulations of the state governments.

(4) Foreign investments of up to 100 percent automatically are permitted in completed projects for the operation and management of townships, shopping centers / shopping complexes and business centers. A transfer of ownership and / or control of the investment company from residents of India to persons outside of India is also permitted as a result of such foreign investment. However, there would be a three year lock-up period calculated by reference to each tranche of foreign investment, and the transfer of real estate or any part of it is not permitted during this period.

(5) "Transmission" in relation to this sector includes:

a. the sale, exchange or transfer of the asset; or

b. the extinction of rights to it; or

c. the compulsory acquisition thereof under any law; or

d. any transaction in which possession of immovable property may be taken or retained in partial performance of a contract of the type set forth in Section 53A of the Transfer of Property Act of 1882 (4 of 1882); or

e. any transaction, by the acquisition of capital instruments in a company, or by any arrangement or arrangement, or in any other way that results in the transfer or the facilitation of enjoyment of immovable property.

(6) "Real estate business" means trading in land and real estate with a view to generating profits therefrom and does not include the development of townships, the construction of residential / business premises, roads or bridges, educational institutions, leisure facilities, urban and regional level infrastructure , Townships;

Explanation:

a. Investments in shares of Real Estate Investment Trusts (REITs) registered and regulated under the Securities and Exchange Board of India (REITs) 2014 are also excluded from the definition of real estate business.

b. Earning rental income from renting the property other than transferring it is not in line with real estate business.

c. Includes transferring in relation to real estate,

(i) the sale, exchange or transfer of the asset; or

(ii) the termination of any rights thereto; or

(iii) the compulsory acquisition thereof under any statute; or

(iv) any transaction in which possession of immovable property may be taken or retained in partial performance of a contract of the type set forth in Section 53A of the Transfer of Property Act of 1882 (4 of 1882); or

(v) any transaction by the acquisition of capital instruments in any company or by any arrangement or arrangement or by any other means that results in the transfer or enjoyment of immovable property.

(7) Real estate brokerage services are excluded from the definition of real estate business and 100% foreign investment in real estate brokerage services is allowed through the automatic route.

[ source : Section 5.2.10 of the consolidated FDI guideline]