Realty may see no FDI lock-in
The Times of India, November 27, 2009, Page 25
Pradeep Thakur & Sanjay Dutta, TNN, NEW DELHI
The commerce ministry has moved a proposal to remove the condition of the minimum lock-in period for repatriation of FDI in construction industry. According to a note circulated among pertinent ministries for their comments, the move is aimed at further easing FDI flow in construction of housing projects, hotels and townships etc.
The proposal is to remove the clause that bars such investors from repatriating their investments before three years from completion of minimum capitalisation of a project. The government had put the lock-in clause while allowing 100% FDI in the sector in 2005. The Press Note 2, which had notified permission for 100% FDI, however, said an investor could be permitted to exit earlier with prior approval of the FIPB.
The commerce ministry’s proposal is expected to spur overseas funds flow into real estate and infrastructure projects. Both these areas are experiencing funds crunch and many housing projects have either stalled or failed to take off as investors closed their purse-strings in the wake of the slowdown.
A revival in this sector is expected to have a multiplier effect on the economy and create jobs for not only unskilled and skilled workers such as labourers and artisans but also for engineers and architects etc. who are involved in developing real estate projects. A resumption of construction development is also expected to boost manufacturing sector by raising demand for such items as steel and cement.
At present, 100% FDI is allowed in the sector under the automatic route in townships, housing, built-up infrastructure and construction-development projects that include housing and commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure.
The FDI permision is subject to a minimum capitalization of $10 million for wholly-owned subsidiaries and $5 million for joint ventures with Indian partners. The foreign investor has to bring in the money within six months of setting shop here. Besides, norms also stipulate that at least half of the project must be developed within a period of five years from the date of obtaining all statutory clearances. An investor is also not allowed to sell undeveloped plots.
Projects with FDI also need to adhere to some other conditions. For serviced housing plots, the project has to be spread over a minimum land area of 10 hectares.
The Times of India, November 27, 2009, Page 25
Pradeep Thakur & Sanjay Dutta, TNN, NEW DELHI
The commerce ministry has moved a proposal to remove the condition of the minimum lock-in period for repatriation of FDI in construction industry. According to a note circulated among pertinent ministries for their comments, the move is aimed at further easing FDI flow in construction of housing projects, hotels and townships etc.
The proposal is to remove the clause that bars such investors from repatriating their investments before three years from completion of minimum capitalisation of a project. The government had put the lock-in clause while allowing 100% FDI in the sector in 2005. The Press Note 2, which had notified permission for 100% FDI, however, said an investor could be permitted to exit earlier with prior approval of the FIPB.
The commerce ministry’s proposal is expected to spur overseas funds flow into real estate and infrastructure projects. Both these areas are experiencing funds crunch and many housing projects have either stalled or failed to take off as investors closed their purse-strings in the wake of the slowdown.
A revival in this sector is expected to have a multiplier effect on the economy and create jobs for not only unskilled and skilled workers such as labourers and artisans but also for engineers and architects etc. who are involved in developing real estate projects. A resumption of construction development is also expected to boost manufacturing sector by raising demand for such items as steel and cement.
At present, 100% FDI is allowed in the sector under the automatic route in townships, housing, built-up infrastructure and construction-development projects that include housing and commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure.
The FDI permision is subject to a minimum capitalization of $10 million for wholly-owned subsidiaries and $5 million for joint ventures with Indian partners. The foreign investor has to bring in the money within six months of setting shop here. Besides, norms also stipulate that at least half of the project must be developed within a period of five years from the date of obtaining all statutory clearances. An investor is also not allowed to sell undeveloped plots.
Projects with FDI also need to adhere to some other conditions. For serviced housing plots, the project has to be spread over a minimum land area of 10 hectares.
Posts
No comments:
Post a Comment