Govt to decide soon on relaxing FDI norms for housing sector

By relaxing the provisions, DIPP aims to attract more FDI and make housing prices affordable

The government would soon decide on relaxing FDI guidelines for the housing sector, including easing the three-year lock-in period norm, a senior official in the DIPP said.

"We have finalised the Cabinet note on the matter. Soon, we will send it for the Cabinet approval," the official told PTI.

By relaxing the provisions, the Department of Industrial Policy and Promotion (DIPP) aims to attract more FDI and make housing prices affordable.

The proposal to ease the FDI guidelines for the sector was originally mooted by the Ministry of Housing and Urban Poverty Alleviation.

The main provisions likely to be relaxed include easing three-year lock-in period for FDI in housing and townships. Besides, the minimum capitalisation is also expected to be reduced to $5 million instead the present $10 million for wholly-owned subsidiaries.

The department has also proposed a cut in the minimum built-up area of 50,000 sq mts in case of construction development projects to 20,000 sq mts of carpet area.

"However, the Planning Commission and the Department of Economic Affairs have not sent their comments to the DIPP. They would put their views at the Cabinet meeting," a source said.

As per the current FDI policy, the lock-in period of three years applies to every tranche of investment brought in by a foreign player from the date of receipt or from the date of 'completion' of minimum capitalisation whichever is later.

The investment cannot be repatriated before a period of three years from completion of minimum capitalisation.

During April 2000 and July 2013, construction development including townships, housing and built-up infrastructure, the country has received FDI worth $22.43 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.