The Cabinet today deferred a decision on relaxing FDI norms in the real estate sector including easing conditions for exit of foreign players before the three year lock-in period.
It was also proposed to modify 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. According to an agency report, minister for Urban Development Kamal Nath requested for deferment of the proposal.
The Cabinet note had also suggested a uniform minimum capitalisation of $5 million for both wholly-owned subsidiaries (WOS) and joint ventures with Indian partners from exiting $10 million.
Companies would, however, need to bring the entire amount within six months of commencement of the project. The commencement of the project will be the date of building plan approval by the statutory authority. There is no clarity at present as to when the commencement of the project be counted from
At present, 100 per cent FDI is permitted thorugh automatic route in the real estate sector which includes townships, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level built-up infrastructure.
The note also asked for reducing the minimum requirement for land for a serviced housing project from 10 hectares to just 5 hectares as there is shortage of land in urban areas and cost of land is too high.
Source: Business Standard