Decision tomorrow on relaxing FDI norms for housing

Govt may ease conditions for exit before the three-year lock-in period

 

The government is likely to take a decision tomorrow on relaxing FDI norms for the housing sector, including easing conditions for exit before the three-year lock-in period.   

"This agenda has been listed in the Union Cabinet which is meeting tomorrow," a source said. The Cabinet note has proposed a change in the current minimum built-up area of 50,000 sq mts to 20,000 sq mts of carpet area for FDI in construction development projects.    

The note also has suggested a uniform minimum capitalisation of $5 million for both wholly-owned subsidiaries (WOS) and joint ventures with Indian parters. At present, the capitalisation requirement for WOS is $10 million    

On exit of FDI before the three-year lock-in period, the note suggests more relaxations. They can exit "on receipt of occupancy and or completion certificate issued by the competent local authority or by way of sale to another non-resident investor subject to a lock-in period of three years from the date of the purchase by the other foreign investor," a source said.

However, the transfer from foreigner to another will be permissible only once, with no possibility of waiver of the fresh lock-in period. Sources also said the Cabinet may discuss the matter of FEMA (Acquisition and Transfer of Movable Property in India) law of May 2000.    

Sources said the minimum area, minimum capitalisation and relaxation in the conditions of three-year lock in period would not be apply to urban renewal projects and integrated slum development projects as defined under the Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awas Yojna.  

Between April 2000 and June 2013, construction development, including townships, housing and built-up infrastructure, in the country received FDI worth $22.24 billion or 11% of the total FDI attracted by India during the period.  

Press Note 2 (2005) of the DIPP allows FDI up to 100% in townships with conditions.  

The DIPP which deals with FDI related matter, issues provisions in the form Press Notes or consolidated circulars.  

Although 100% foreign direct investment is allowed in townships, housing and built-up infrastructure and construction developments, the government has imposed conditions.