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Finance, Commerce and Urban Development ministers will meet soon to sort out the differences over relaxation of FDI norms for the construction sector.
“FDI in construction is being deliberated upon (by the Cabinet). Three ministers will meet. Myself, Finance Minister (P. Chidambaram) and Urban Development Minister Kamal Nath.
That is what the Cabinet has said...The decision will be (taken) soon,” Commerce and Industry Minister Anand Sharma told PTI.
Sharma said the move will help in attracting more foreign investment in construction and real estate sectors.
DIPP proposal
Last month, the proposal of the Department of Industrial Policy and Promotion (DIPP) to relax foreign direct investment (FDI) norms in the sector was discussed at the Cabinet meeting but was deferred because of concerns being raised by the Urban Development Ministry on few norms.
DIPP has proposed easy conditions for exit for developers before the three-year lock-in period and a change in the current requirement of having a minimum built-up area of 50,000 sq.m. to 20,000 sq.m. of carpet area for FDI in construction development projects.
It has also suggested a uniform minimum capitalisation of $5 million for both wholly owned subsidiaries (WOS) and joint ventures with Indian partners. At present, the capitalisation requirement for WOS is $10 million.
Further, the Cabinet note had said that such developers 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.
However, the transfer from foreigner to another will be permissible only once, with no possibility of waiver of the fresh lock-in period.
Between April 2000 and September 2013, construction development, including townships, housing and built-up infrastructure in the country, received FDI worth $22.76 billion or 11 per cent of the total FDI attracted by India during the period.
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