Moumita Bakshi Chatterjee
Deepak Goel

New Delhi , July 24

THINK local-act global, is the mantra that overseas players eyeing Indian realty market seem to be chanting now.

Even as relaxed FDI norms in the real estate sector has substantially heated up the market, on-the-ground local issues including high stamp duties, Urban Land Ceiling and Regulation Act and lack of clarity in land titles may prove to be a dampener in the smooth flow of foreign investment into the country.

"We are satisfied with the FDI norms per se. However, some ground-level concerns still exist. For instance, some States including Andhra Pradesh, West Bengal, and Kerala are yet to repeal the Urban Land Ceiling and Regulation Act," Mr Anuj Puri, Managing Director of Chesterton Meghraj said.

There is also an urgent need to reduce stamp duties, which is far higher than the global average of three to four per cent. "The average stamp duty rate is currently pegged at eight per cent and needs to come down to less than half. In States like West Bengal the duty is as high as 12 per cent," Mr Puri said.

Moreover, the players find it difficult to identify land with clear titles. "Land is the largest inventory for the sector and the biggest hurdle today pertains to land reforms. Acquisition of land remains a grey area and the title check procedure is manual, leaving scope for litigation. So acquisition and development is a challenge for foreign players," Mr Sanjay Verma, Joint Managing Director, Cushman and Wakefield India pointed out.

Pitted against these ground realities, foreign players are approaching State Governments for availing land rather than procuring it from the market, as it reduces the risks. "However, this restricts the options for players as Government may not always have prime land available," Mr Puri said.

Mr Anshuman Magazine, Managing Director - South Asia, CB Richard Ellis, feels that foreign players are primarily satisfied with FDI guidelines announced earlier this year, and are looking at two issues. "The first relates to opening up of FDI in retail - which will have a huge multiplier effect on economy and boost the market - and the second is about permitting foreign players to buy and sell property at some later stage," he said.

The current norms restrict foreign firms from selling undeveloped land, a move Government feels would help avoid speculation.

Indian developer Ansal feels the hurdles faced by players is more in terms of lengthy approval processes. "There is no time-bound approval mechanism. Each project needs 20-25 sanctions including electricity, water and pollution control certificates from multiple agencies," Mr Pranav Ansal, Chairman of Ansal Township and Projects Ltd, said adding that real estate should be granted an industry status. According to Parsvnath Chairman, Mr Pradeep Jain, getting clearances and sanctions from multiple agencies could act as an irritant. A single window clearance could be the solution.

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