Reits now eligible under Fema

After getting partial relief from imposition of Minimum Alternate Tax (MAT), real estate investment trusts (REITs) got another boost when the Cabinet on Wednesday approved a proposal to enable foreign investment into these.

The proposal recognises REITs as eligible financial instruments or structures under the Foreign Exchange Management Act (Fema). Thus, entities registered and regulated under the Sebi (Reits) Regulations of 2014 will be able to access foreign investments; till now, these were barred under Fema regulations.

The intent of introducing Reits was also to reduce pressure on the banking system, to which the real estate sector looks for funds, and to encourage construction.

It is hoped that Reits would attract long-term finance from foreign and domestic sources, making available fresh equity to the sector.

Modifying the guidelines to the mega food park scheme, the Cabinet Committee on Economic Affairs (CCEA) has allowed central government agencies to become shareholders in the Special Purpose Vehicles (SPVs) to operate such parks, without restriction on the equity.

Till now, central agencies could hold up to 26 per cent stake in the SPVs. Sometime earlier, the Centre allowed state governments to hold majority stake in the SPVs. Wednesday's modification brings central agencies on a par with state ones. “These modifications will streamline implementation of the scheme,” went an official statement.

In 2008-09, the government had planned 42 food parks across the country, each on 30-50 acres, with help of the private and public sectors. Of the 42 allocated in the first phase, work started only on 25; the remaining 17 could not take off for various reasons.

In March, the Centre re-allocated these 17, allotments of which had been cancelled. Of the new allottees, Adani Ports and Special Economic Zone, Jain Agro Trading Company and Ruchi Acroni Industries from the Ruchi Group were among 10 private entities which got rights to develop these parks.  Seven parks went to state governments.

Ahead of Prime Minister Narendra Modi's visit to  South Korea this month, the Cabinet cleared a revised Double Taxation Avoidance Agreement with that country.

It provides for source-based taxation of capital gains,  adjustments to profits of associated enterprises on the basis of arm's length principles, residence-based taxation of shipping income, provisions for service of permanent establishments, rationalises tax rates on dividends, interest and royalties, and fees for technical services.

The Cabinet also approved operationalisation of three safety net schemes, to be launched by Prime Minister Narendra Modi in Kolkata shortly. These are the Atal Pension Yojna, Pradhan Mantri Jeevan Jyoti Bima Yojana  and Pradhan Mantri Suraksha Bima Yojana.

MoU with Seychelles

The Cabinet cleared a memorandum of understanding  on renewable energy cooperation with Seychelles, signed during the PM's visit there in March.
OTHER DECISIONS

Whistleblowers Protection Act, 2011

• Amendment to the Act approved
• To keep issues of national security out of its purview
• Govt to move amendment Bill in Parliament in the Budget session

Satellites

• Proposal for building GSAT-17 and GSAT-18 communication satellites approved
• Satellites to support telecommunication, television services and in-orbit back-up
• GSAT-17 and the GSAT-18 to cost Rs 1,013.2 cr and Rs 1,022 cr, respectively