Illiquid assets · room 10 of 13

The Indian lexicon.

6 minute read

A firm that works across a market must first speak it. This is the working vocabulary of Indian development as it is used in files: not exhaustive, and not neutral. Where a word hides a structural consequence, the definition says so, and a term sheet read against this lexicon tells a committee what it is actually being offered.

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01 · Entry and exchange control

The rulebook's words

The words that decide whether capital moves.

Automatic route: Investment that proceeds without prior government approval. Construction development carries it in full, so structure, not permission, is the real entry question.
Lock-in, per tranche: The three-year hold on foreign capital, counted from each tranche's date rather than from first close. A funding schedule is therefore also a calendar of differently dated locks, and it is modelled as one.
Trunk infrastructure: Roads, water supply, street lighting, drainage and sewerage. The completed set is one of the two gates through which early exit is lawful, and it is evidenced, not asserted.
Developed plots: Plots where trunk infrastructure exists. The only kind a foreign-funded structure may sell as land.
Real estate business: The prohibited category: dealing in land and property to profit from the dealing itself. Development is outside it. Rent on leased assets is expressly outside it. Buying land to sell land is inside it, and structures drift there by accident more often than by design.
Downstream investment: An Indian company investing into another Indian entity. Once the investor company is foreign owned or controlled, its downstream money carries the foreign conditions with it. Ownership launders nothing.
Foreign owned or controlled company: An Indian company with majority foreign beneficial ownership, or a foreign right to appoint most of its board. The status that switches the downstream rules on.
Pricing guidelines: The fair-value discipline on entries and exits between residents and non-residents, certified under a recognised methodology. The certificate belongs in the file.
Investment vehicle: The regulated fund category whose downstream investment counts as domestic when its sponsor and manager are Indian owned and controlled. It is defined here because it appears in term sheets, not because the firm holds a view on the route.

02 · Land and title

The ground's words

The words that decide what is actually owned.

Mother deed: The root conveyance a chain of title descends from. Diligence walks forward from it, thirty years back at minimum, because every later deed inherits its defects.
Encumbrance certificate: The registrar's statement of registered transactions against a property for a stated period. It shows what was registered. It does not show what was never registered, so it opens diligence rather than closing it.
Mutation: The revenue record catching up with a transfer. Registration without mutation is a deed the land records have not heard about, and the gap is where disputes breed.
7/12 extract · khata · patta: The revenue record under its state names: the 7/12 extract in Maharashtra, the khata in Karnataka, the patta in Tamil Nadu. Different documents, one function: who holds, what tenure, which crops, whose charge. Reading them in the local form is the price of admission.
Tenure conversion: The state permission that turns agricultural land into land that may be built on. Discretionary, state-specific, and the single most common silent assumption in a foreign underwriting.
Encroachment: Occupation the paper does not admit. Found by walking boundaries against the survey sketch, not by reading. Possession is a fact with feet.
Joint development agreement: Land contributed against a share of built area or revenue. Capital-efficient, dominant, and a dispute machine wherever the share definitions, sanction risk and cost escalation are left loose.
Development management agreement: Delivery discipline and brand brought to a holder's project for a contracted share, with the land staying where it is. The asset-light structure institutional residential increasingly runs on.

03 · Consents and delivery

The programme's words

The words that decide when, and how tall.

Change of land use: The planning permission that re-purposes a parcel. Often the first consent in the chain and the one everything after it hangs from.
Commencement certificate: The authority's permission to start building, issued against the sanctioned plan. Building past its conditions is how occupation certificates get lost years later.
Prior environmental clearance: The clearance that must exist before land is prepared, where thresholds trigger it. Prior is the operative word: the retrospective route survives only as a narrow, supervised exception, and an asset that used one carries a live question into every later gate.
Fire consent: The fire authority's approval, provisional at design and final at completion. The market calls it the fire NOC. Whatever it is called on the day, it is a completion gate.
Occupation certificate: The statutory permission to occupy. Without it a building is inventory, not an asset: lawful use, tax treatment and lenders' completion tests all turn on it, and late occupation certificates usually trace to an unresolved deviation from the sanctioned plan.
Floor space index: The ratio of buildable area to plot, and the whole economics of a site. Base entitlement, premium purchases and transferable rights stack into the true number, which is municipal, changeable, and never an assumption an appraisal can carry unevidenced.
Transferable development rights: Buildable area detached from one parcel and loaded onto another. A legitimate development input. A prohibited trading asset for foreign capital. The line between those two sentences is a structuring decision.
Development charges: The state and municipal levies on the grant of development rights. Materially different between states, revised without much ceremony, and a line an appraisal carries explicitly.

04 · Regulation and reporting

The committee's words

The words that decide what the capital is told.

Project registration: The delivery regulator's gate on marketing and sale, registered per project and per phase. The public register is a counterparty diligence source in its own right, and it is read before any developer's own material.
Separate project account: The statutory escrow into which the defined share of buyer collections must flow, released against certified progress. The discipline that ended the era of one project funding another, where it is honoured. The register shows where it is not.
Abeyance: The regulator's public holding state for projects that lapsed or stopped filing. A counterparty's abeyance history is a character reference, published.
Initial report: The monitor's opening due-diligence report, fit to stand as a condition precedent of the facility. The document a lender reads before the first rupee moves.
Drawdown certificate: One page, gross and net, in figures and in words, above a signature that binds the certifier. The calculation lives behind it, and so does the evidence.
Cost to complete: The only number that matters monthly: what it now takes to finish, held against what remains available. Everything else in a report is context for this line.
Exception report: The note that does not wait for month end. Fact, exposure, options and the decision sought, inside a clock the appointment defines rather than the reporting cycle.
Loan to value · loan to cost · peak spend: The three funding controls a facility runs on: debt against completed value, debt against total cost, and the cash ceiling on the worst day. A monitor confirms all three every cycle, or it is not monitoring.

We are an independent specialist transaction-architecture firm. These definitions are structural rather than legal, and the legal meaning of any term on a given set of facts belongs to the manager's own Indian counsel.

The Indian conditions The Eight Gates