Builders Liquidity to Improve After Easing of FDI Rules: Fitch

Rating agency Fitch said on Tuesday that easing of foreign direct investment (FDI) rules in the realty sector would improve the liquidity situation of developers and boost supply but could also result in increased price competition among them.

On October 29, the Cabinet had relaxed FDI rules in construction sector by reducing minimum built-up area as well as capital requirement and easing the exit norms.

"Relaxation of rules on foreign direct investments into India's property development sector, will improve developers' liquidity and speed-up project-turnaround times, but may also increase competition," Fitch Ratings said in a statement.

Key amendments in the FDI ruled include allowing foreign developers to invest in smaller property development projects - with a minimum floor area of 20,000 square metres compared to 50,000 square metres earlier.

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