India has just relaxed its rules to allow overseas investments in real estate investment trusts (REITs), bringing the country one step closer to an expected company listings value in excess of £13bn.

REITs will be allowed as an eligible financial instrument under the Foreign Exchange Management Act, the government said.

The Indian REITs will be able to access foreign investments, which were prohibited under foreign-exchange rules. The move clears one more hurdle to the introduction of REITs and will help reduce pressure on the banking system to fund the real estate sector. REITs will enable the industry to raise fresh equity, while attracting long-term finance from foreign and domestic investors, the government said.

The development of the country’s REITs, which Cushman & Wakefield estimates will raise over £13bn through initial stock offerings, has been hindered by tax rules that limit their appeal to investors. However, the Indian government has further amended some taxes to remove levies on gains as a result of transferring the asset from the property owner to the REIT.

DLF Ltd., India’s largest real estate developer, said last month that it plans to set up its first REIT as soon as it gets approval.