Institute of Real Estate & Finance Dhayari Center

NEW DELHI: The finance ministry has not included purchase of agricultural land for development of real estate projects in its proposed amendments to FDI policy in the realty sector. The urban development ministry had supported allowing of FDI, while buying agricultural land for realty development to end any ambiguity vis-a-vis other sectors. The proposal is likely to taken up by the Cabinet for consideration on Thursday.

Most of the land available for township projects is agricultural in nature. To expedite construction activities, many developers take money foreign investors to change usage pattern of the land after purchase. The legal status of such purchases is not very clear, said the urban development ministry.

According to a note prepared by the UD ministry, "As clarified by the department of industrial policy and promotion (DIPP), the companies set up with FDI can purchase immovable property/agricultural land for construction development projects as per the provisions of DIPB circular 1 of 2011 and 2013.'' It further clarified that land is to be exclusively used for the construction development projects. However, there is ambiguity in the matter. The note pointed out that contrary to DIPP clarification, some government departments are still taking a view that under the FDI policy purchase of land is not allowed. In order to end this ambiguity, the UD ministry had included the proposal to allow the purchase of agricultural land in the note to amend the existing policy.

Source :The Times Of India
Prabhakar Sinha, TNN | Nov 7, 2013, 01.20AM IST

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What Is a Transfer of
Development Rights
(TDR) Program?

A TDR program seeks to preserve landowners'
asset value by moving the right to build a house
from a location where development is prohibited
(e.g., for environmental reasons) to a location
where development is encouraged.
Because the total number of houses ultimately
built in the larger region does not go down as a
result of simply moving the geographic location
of the new homes, there should be enough
money available overall to compensate
landowners in the restricted area for any decline
in their land value, without sacrificing the profits
of landowners elsewhere.
The trick is to transfer part of the purchase
price for land in a location where development
is encouraged to a landowner in a place where
development is prohibited.

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