The Hindu Business Line : FIPB rejects Keppel proposal to sell 1.5 acres unused land back to Puravankara Projects

The Foreign Investment Promotion Board has rejected a proposal by Keppel Puravankara Development (KPDL), Bangalore, to sell the 1.5 acre unused land back to Puravankara Projects Ltd, as FDI norms do not permit sale of undeveloped plots.

Joint venture

KPDL is a joint venture between the Singapore-based Keppel Land and Indian firm Puravankara Projects Ltd for development of integrated township projects in Bangalore. KPDL had acquired certain vacant plots (including the 1.5 acres plot) with the view to undertaking construction and housing project on a parcel of 62 acres, sources said.

The project, however, did not materialise, and since KPDL cannot use a small portion of land for any FDI-compliant project, the company proposed to sell the ‘unused’ land of 1.5 acres at the current price.

Keppel Land, through its subsidiaries, holds 51 per cent of equity share capital in KPDL with the remaining 49 per cent being held by Puravankara.

Sources said that KPDL had stated that the proposed sale of the ‘undeveloped land’ of 1.5 acres at cost would not qualify as a real estate transaction as it did not involve any real estate motive.

Unused land

“KPDL has proposed to sell the unused land at the cost at which it has acquired from Puravankara Projects (inclusive of all charges), back to PPL. The company said that this demonstrated the absence of any real estate motive or nature in the context of the proposed sale of transaction,” sources said.

Sources pointed out that the land was proposed to be sold back to PPL at cost at which it was purchased or at the market price. The proposal did not involve any fresh FDI inflow.

The matter came up for discussion at the FIPB meeting in October end where the Department of Industrial Policy & Promotion (DIPP) did not support it on the ground that Press Note 2 (2005) does not permit sale of undeveloped plots.

The FIPB noted that FDI in real estate is prohibited and that purchase or sale of land would be categorised as a real estate activity. The companies could not be reached for comments.