Under the new rules, foreign investment is now allowed in projects with a minimum built area of 20,000 square metres, down from a previous 50,000 threshold. The minimum capital investment by foreign companies has also been halved to USD 5 million, the government said in a statement.
               
Prime Minister Narendra Modi has a vision to create 100 new "smart cities" by 2020, and to make that a reality foreign capital is likely to play a part.
               
India's construction industry, worth an estimated USD 126 billion, attracted 11 percent of all foreign investment into the country between 2000 and 2013, the second highest of any sector, but the pace of investment has slowed in recent years.


               
The country received USD 1.2 billion of foreign direct investment in the year to March 31 compared with USD 1.3 billion the previous year. Between April and August this year, foreign investment totalled USD 446 million.
              
Decisions to open up land for development and the granting of various approvals typically lie with individual states and municipalities in India.
               
Previously, India allowed 100 percent foreign direct investment in real estate development but with strict conditions, including a lock-in period of three years during which the investment cannot be repatriated.

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