When Indian Finance Minister Palaniappan Chidambaram presented his budget for 2005-06 in Parliament in February, the construction industry was already semi-euphoric. His long-term vision for Mumbai, India's commercial capital, made it even happier.
'I would like Mumbai to become another Shanghai, which is today considered China's showpiece. And I intend introducing legislation that will make infrastructure-building that much easier,' he said.
Just a week earlier, the Commerce Ministry had relaxed the laws for entry of foreign players, implying that the government was keen on doing away with archaic laws such as the Urban Land Ceiling Act that had stifled the growth of Mumbai.
The liberalisation of foreign direct investment (FDI) in real estate had evoked interest in India among foreign investors, including the US-based CB Richard Ellis (CBRE), which manages investment worth more than US$15 billion worldwide in the real estate sector.
CBRE president Brett White, who visited India recently, said: 'We have received several inquiries regarding investment opportunities in India. India as a brand is well established in the international market. If the government were to create the right environment, investments will pour in. The recent FDI legislation, for example, is very attractive.'
The central government decision to reduce the mandatory minimum area for allowing FDI from 40.4 hectares to 10.1 hectares has been welcomed by investors as more practical, especially from the point of view of land availability in metropolitan centres.
The Maharashtra state government has done its bit by moving a proposal to offer 50 per cent additional floor space index (FSI) for redevelopment projects.