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Govt likely to decide on relaxing FDI norms for housing sector soon

15 Oct 2013 Evaluate

With an aim to attract more foreign investments into the housing sector and to provide houses at affordable prices to the people, the government is likely to decide soon on relaxing foreign direct investment (FDI) guidelines for the sector. In September, the Department of Industrial Policy & Promotion (DIPP), after taking views on this proposal from various ministries, including the finance, home affairs ministries and the planning commission, has circulated a draft note to cabinet for approval.

The draft note proposes easing the three-year lock-in period for FDI in housing and townships, and also seeks reduction in the minimum capitalization to $5 million from the present $10 million for wholly-owned subsidiaries. According to the present 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 capitalization whichever is later. Further, the note has suggested a cut in the minimum built-up area of 50,000 sq mts to 20,000 sq mts of carpet area in case of construction development projects. Meanwhile, despite allowing 100 percent FDI in townships, housing and built-up infrastructure and construction developments, the government has also imposed conditions on it.

India has received FDI worth $22.24 billion during the period from April 2000 to June 2013, in construction development sector including townships, housing and built-up infrastructure. Meanwhile, in April-June period of this fiscal, overall FDI in the country stood at $5.39 billion.  

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