. What local financing options are available to foreign landowners?

Local financing options for foreign landowners investing in industrial land are limited but evolving, especially in countries like India, where regulatory frameworks prioritize domestic capital for land-intensive transactions. However, several legal and institutional pathways allow foreign landowners to access project funding, operational credit, or joint venture capital, either directly or through local intermediaries. Below are five primary financing options available to foreign landowners:

1. Non-Banking Financial Companies (NBFCs) and Infrastructure Lenders

• Certain NBFCs registered with the RBI provide structured debt to foreign-owned entities operating in India.
  
• Funds are typically available for:
  
  • Site development
    
  • Infrastructure execution
    
  • Bridge loans against lease receivables
    
• Foreign landowners must operate through a locally incorporated subsidiary (e.g., private limited company or LLP) to qualify.
  
• Lenders often require collateral in the form of:
  
  • Land use rights
    
  • Pre-leased assets
    
  • Escrow-backed cash flows

2. Foreign Direct Investment (FDI) Through Indian SPVs

• Foreign landowners can capitalize their project by injecting FDI into Indian Special Purpose Vehicles (SPVs) under:
  
  • 100% automatic route for industrial parks, warehousing, logistics, and manufacturing
    
• The SPV can then raise local rupee debt using:
  
  • Developer contributions as equity
    
  • Land leasehold rights as collateral
    
• This structure is essential to meet FEMA and RBI compliance norms.

3. External Commercial Borrowings (ECBs)

• Foreign currency loans from offshore lenders are permitted for infrastructure projects, including certain types of industrial land development.
  
• Must be routed through eligible Indian entities under the automatic or approval route.
  
• ECBs can fund:
  
  • Land-related development (not raw land purchase)
    
  • Civil construction
    
  • Long-term leasing for warehousing or logistics
    
• Requires end-use compliance, average maturity thresholds, and RBI registration.

4. Bank Loans via Domestic Joint Venture Partnerships

• If a foreign landowner partners with a local JV partner, the Indian partner can:
  
  • Secure loans in their name or jointly with the SPV
    
  • Offer additional security or guarantees..
    
• Many public and private sector banks offer:
  
  • Term loans for industrial estate development
    
  • Construction finance for factory buildings or sheds
    
• Local participation strengthens bankability and aligns with priority sector lending targets.

5. State Government Schemes and Land-Based Subsidies

• Some industrial development corporations (e.g., MIDC, TIDCO, GIDC) offer:
  
  • Land financing schemes through deferred payment plans or lease-to-own models
    
  • Capital subsidies, interest subvention, or viability gap funding for foreign-backed projects in designated zones
    
• These are conditional on:
  
  • Local job creation
    
  • Investment thresholds
    
  • Regulatory compliance under Industrial Policy incentives