The government will exclude hotel and tourism projects from the three-year lock-in clause.
In order to accelerate the foreign investment in the country’s hospitality sector, the government has decided to exclude hotel and tourism projects from the three-year lock-in clause which governs real estate activities.
The move is expected to give a boost to the plans to increase the number of hotel rooms in the country, besides enabling domestic realty majors to induct foreign partners in their projects.
Companies like Unitech and DLF, who have lined up massive projects in the hotels and tourism sector are keen to supplement liquidity with foreign funds.
Currently, foreign direct investment (FDI) norms forbid foreign investors from repatriating profits back home for three years if investments are made in “real estate projects” including hotels and tourism-related ventures.
According to official sources, to avail the proposed relaxation, projects must earmark a minimum 50% of built-up space for hotel and tourism activities, including beach resorts, restaurants and tourist complexes, and at least 20% for developing hotel rooms.
The move will also benefit firms that incorporate hotel projects in their real estate projects.
According to tourism ministry estimates, there are about 1.2 million hotel rooms in the country. The requirement for 2020 is estimated to be 6.6 million rooms. Mixed projects are required for promoting tourism, feels DIPP.
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