Who is defined as an NRI?

Under the Foreign Exchange Regulation Act of 1973, Non-Resident Indians are:

• Indian citizens who stay abroad for employment or carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite period of stay abroad.

• Government servants who are posted abroad on duty with the Indian missions and similar other agencies set up abroad by the Government of India where the officials draw their salaries out of Government resources.

Do NRIs require consent of Reserve Bank of India buy immovable property in India?

No. NRIs do not require any permission to buy any immovable property in India other than an agricultural property or a farmhouse.

Is there any limit on the number of housing properties that may be purchased by an NRI?

There are no limits on the number of residential properties that may be bought by an NRI. However, repatriation(the process of converting foreign currency into the currency of one's own country) is allowed only in respect of two such properties.

Does RBI have any guidelines for loans to NRIs?

There are guidelines issued by the RBI for grant of Housing Loans to NRIs. The guidelines are:

a) The loan amount shall not exceed 85% of the cost of the housing unit.

b) Own contribution, which is the cost of housing unit financed less the loan amount, can be met from direct remittances from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and/or Non-Resident (Ordinary) [NR (O)] account and/or Non-Resident Special Rupee account [NRSR] in India.

c) Reimbursement of the loan, comprising of the principal and interest including all the charges are to be remitted from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and/or Non-Resident (Ordinary) [NR (O)] account and/or Non-Resident Special Rupee account [NRSR] in India.

What kinds of incentive can NRIs look forward to in the Indian real estate industry that favours investment?

The relaxation of FDI in the construction development sector announced in March 2006 gives NRIs, PIOs and all foreigners an equal opportunity with their Indian counterparts in the Indian real estate sector. The new guidelines state that before selling, the site has to be developed/constructed upon or fulfill the criteria of minimum one year of development.

i) NRIs, PIOs and foreigners can now invest in land, buy it, construct upon it or develop it, sell constructed buildings/developed plots.

ii) FDI through automatic route can also flow in not just for the housing sector, but also for townships, housing, commercial areas, and infrastructure development.

iii) Restrictions on minimum area of land, minimum number of units has been removed.

iv) Minimum constructed area required is 50, designated area is 25 acres.

What are the steps an NRI should follow for getting all the clearances in a hassle-free manner? Whom should one meet in the process?

A lot depends on the segment you want to invest in. It helps to gauge the future state and to know what utilities are available.

An office market investment, for instance, requires you to:

Get in touch with consultants for advice on the choice of city. Outline your objectives, the size of your investments. Have an approximate of the returns you are expecting.

The yield that has evolved from distinct parameters ranges between 8-8.5% to 12% for office spaces and 4%-6% for residential spaces. Whether the land is for investment or for development is also a deciding factor, as is the local demand-supply situation. While investing in India, the availability and quality of infrastructure or utilities like power, connectivity, security and long-term future plans need to be scrutinized.

Is a single window clearance possible?

Single window clearance for a real estate project in India sometimes may be difficult, because of the involvement of several authorities. If it's a multi-storeyed building, you need to get clearance from town planning authorities, clearance on design, elevators, firefighting agencies, etc.

Efforts are on to make the process simpler and transparent, though.

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