2 September 2016
CABINET APPROVES GRANT OF ‘PERMANENT RESIDENCY’ STATUS TO FOREIGN INVESTORS
The Union Cabinet under the chairmanship of Prime Minister Shri Narendra Modi has approved the scheme for grant of Permanent Residency Status (PRS) to foreign investors subject to certain conditions. The PRS will be granted for 10 years with multiple entry. This can be reviewed for another 10 years if the PRS holder has not come to adverse notice. In order to avail this scheme, the foreign investor will have to invest a minimum of INR 10 crores (INR 100 million) to be brought within 18 months or INR 25 crores (INR 250 million) to be brought within 36 months. Further, the foreign investment should result in generating employment to at least 20 resident Indians every financial year. PRS holders will be allowed to purchase one residential property for dwelling purpose. The spouse/ dependents of the PRS holder will be allowed to take up employment in private sector (in relaxation to salary stipulations for Employment Visa) and undertake studies in India.
Residential Services view
The Government’s decision to grant Permanent Residency status to foreign investors is a welcome step and in line with various other initiatives such as “Make In India” to increase foreign investment in the country. As the policy allows the PRS holders to buy residential property for dwelling purposes, it will increase the end-user base and add an opportunity for the residential market which has been under-performing for quite some time.
Internationally, countries like Hong Kong, Singapore, Dubai, UK and Australia allow foreign property investment, with certain limitations. For example in Singapore, foreign ownership is unrestricted in developments approved as a condominium development or a flat in a building of 6 levels or more. However foreigners are restricted from purchasing vacant land, landed residential property, such as bungalows, terrace houses, semi-detached houses and apartments in a building of less than 6 levels. Moreover, foreign persons are not eligible to buy restricted properties without approval of the Controller of residential property of Land Dealings Approval Unit. In Hong Kong, a foreigner can buy property on a land tenure basis, with leases ranging from 50 to 999 years. In Dubai, there is a formal legislation that allows foreigners to buy, sell, and lease/rent property. In our opinion, providing permanent residency to investors in India, is a laudable footstep. However, a few more steps in addition to further relax rules in relation to foreign ownership, with a certain minimum investment limit or condition, may promote the residential sector in a big way.