New Delhi: Commerce and Industry Minister Anand Sharma has said that he will soon be meeting Finance Minister P Chidambaram and Urban Developments Minister Kamal Nath to sort out differences over relaxation of foreign direct investment (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," Mr Sharma told PTI on Tuesday.
"The decision will be (taken) soon."
He said the move will help in attracting more foreign investment in the construction and real estate sectors.
Last month, the proposal of the Department of Industrial Policy and Promotion (DIPP) to relax FDI norms in the sector was discussed in the Cabinet meeting but was deferred because of concerns being raised by the Urban Development Ministry on few norms.
The 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 mts to 20,000 sq mts 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.
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 matters, also issues provisions in the form of Press Notes or consolidated circulars.
Although 100 per cent FDI is allowed in townships, housing and built-up infrastructure and construction developments, the government has imposed conditions.
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