The paper is divided into three parts. First part of the article spells out the entry routes for investment, liberalization of real estate sector in 2005 and subsequent growth of the Indian real estate market. The second part forms the nucleus of this article, as it canvasses or analyzes in-depth, the primary Indian real estate laws before focusing on the key aspects of FDI in the Indian real estate and key out affiliated problems. A discussion of the challenges faced by foreign investors, in particular transparency and establishing legal title to property, will then follow. The third part stresses on certain possible improvements and amendments in the existing FDI norms as well as local laws so that the object of opening up the real estate sector to foreign investors is fulfilled. The article concludes by summarizing the observations made in the article and the way ahead for the real estate sector in terms of foreign investments.

Foreign Direct Investment (FDI) principally is the revenue brought into the country by foreign agencies for the purpose of business or investments. Let us convolute time to four years back. An epoch, when Commerce Minister Kamal Nath lavished his ebullience on real estate by earmarking 100% FDIs on the automatic route in the construction development sector. Until then foreign investors had to seek the consent of India's bureaucratic Foreign Investment Promotion Board (FIPB) to set up construction projects. Despite strong tremors received during the global recession, the real estate sector still remains one of the most promising and lucrative investment options. Commentators on the Indian real estate market have observed:

Much like the miners of 1949 and the ventures capitalists of 1999, real estate investors of 2008 seem to have found their destination - India.

According to an AT Kearney's FDI Confidence Index:

India is evolving as one of the `most favored destinations' for FDI in Asia and the Pacific (APAC). It has displaced US as the second most favored destination for Foreign Direct Investment (FDI) in the world after China.

Vantage of FDI in real estate for Indian economy can be extracted by the fact that it is the second largest employer next only to agriculture and its size is close to $12 bn and grows at about 30% per annum. 5% of the country's GDP is contributed by the housing sector. In the next three to five years, this contribution to the GDP is expected to rise to 6%.

Law Review Journal, Foreign Direct Investment, Indian Real Estate Market, Indian Economy, Foreign Investment Promotion Board, Construction Development Projects, FDI Norms, Real Estate Sectors, Foreign Exchange Management, Real Estate Transaction, Agricultural Properties, External Commercial Borrowings, Real Estate Mutual Funds, Mutual Fund Regulations, REMF Schemes, Land Acquisition Collectors.