NEW DELHI (Reuters) - India's federal cabinet on Wednesday relaxed rules to allow foreign funds to invest in real estate investment trusts (Reits), a move designed to revive the country's capital-starved property sector.

New Delhi introduced Reits last year to pool in capital from overseas and help developers reduce their debt.

But provisions in the country's Foreign Exchange Management Act (FEMA) have, thus far, prevented actual investment flows.

The FEMA governs cross-border transactions. "The approval is expected to enable foreign investment inflows into the completed rent-yielding real estate projects, which is, as of now, prohibited," the government said in a statement.