DELHI: The government today deferred a proposal on relaxing FDI norms for the housing sector. "Minister of Urban Development Kamal Nath has requested for deferment of the proposal," a source said.
The proposal was listed in the agenda of today's Cabinet meeting.
A Cabinet note proposed easing conditions for exit of foreign players before the three-year lock-in period. It has also proposed a change in the current requirement of having a minimum built-up area of 50,000 sq mts to 20,000 sq mts of carpet area for FDI in construction development projects.
The note has suggested a uniform minimum capitalisation of $ 5 million for both wholly-owned subsidiaries (WOS) and joint ventures with Indian parters. At present, the capitalisation requirement for WOS is $ 10 million
On exit of FDI before the three-year lock-in period, the note has suggested more relaxations. They 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", a source said. 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 June 2013, construction development, including townships, housing and built-up infrastructure, in the country received FDI worth USD 22.24 billion or 11 per cent of the total FDI attracted by India during the period.
Press Note 2 (2005) of the DIPP allows FDI up to 100 per cent in townships with conditions. The DIPP which deals with FDI related matter, issues provisions in the form Press Notes or consolidated circulars. Although 100 per cent foreign direct investment is allowed in townships, housing and built-up infrastructure and construction developments, the government has imposed conditions.