Multiple FDI projects may give relief to realty players
Source: Economic Times.
NEW DELHI: Real estate companies, who are bound by strict conditions for bringing in foreign direct investment (FDI), can now look forward to a breather. Companies developing several projects simultaneously are likely to get a waiver on meeting FDI conditions on some if majority of the projects are FDI-compliant. Realty companies are subjected to conditions such as three-year lock-in period and a minimum development of 10 hectares for bringing in FDI. The move will particularly benefit real estate companies that take up expansion plans from time to time. Under the proposed waiver, such expansion schemes/projects would be eligible to get foreign funds even if they do not comply with the required conditionalities separately on their own. “Many a time, the developer faces difficulty to hive off projects that are not FDI-compliant. The industry’s main grouse is that if some of the projects are taken in isolation it negates the purpose of the whole project,” a senior government official said.
Officials in the department of industrial policy and promotion (DIPP) said some developers have sought permission to retain projects that do not comply with FDI guidelines laid down under Press Note 2 even after infusing foreign investment. The department is in discussion with the foreign investment promotion board (FIPB) to firm up new guidelines for easing investments in such projects. A meeting on the issue is expected next month. Experts are of the view that the government’s move would help real estate developers mobilise FDI. Many of these firms are otherwise left in lurch due to non-FDI compliance in one or two projects. “There have been many instances in the past where real estate companies have faced rejection from the government for bringing in FDI owing to non-compliance in one or two projects out of 18-20 projects. The law should allow FDI to a project as a whole at the entity level, even if some of the projects do not measure up to the FDI guidelines,” real estate consultant Jones Lang LaSalle Meghraj MD Anuj Puri said. The real estate industry has also urged the government to waive the condition of three-year lock-in period for pre-IPO investment by overseas entities and treat them as portfolio investment rather than FDI. The matter is also under active consideration of the DIPP.
NEW DELHI: Real estate companies, who are bound by strict conditions for bringing in foreign direct investment (FDI), can now look forward to a breather. Companies developing several projects simultaneously are likely to get a waiver on meeting FDI conditions on some if majority of the projects are FDI-compliant. Realty companies are subjected to conditions such as three-year lock-in period and a minimum development of 10 hectares for bringing in FDI. The move will particularly benefit real estate companies that take up expansion plans from time to time. Under the proposed waiver, such expansion schemes/projects would be eligible to get foreign funds even if they do not comply with the required conditionalities separately on their own. “Many a time, the developer faces difficulty to hive off projects that are not FDI-compliant. The industry’s main grouse is that if some of the projects are taken in isolation it negates the purpose of the whole project,” a senior government official said.
Officials in the department of industrial policy and promotion (DIPP) said some developers have sought permission to retain projects that do not comply with FDI guidelines laid down under Press Note 2 even after infusing foreign investment. The department is in discussion with the foreign investment promotion board (FIPB) to firm up new guidelines for easing investments in such projects. A meeting on the issue is expected next month. Experts are of the view that the government’s move would help real estate developers mobilise FDI. Many of these firms are otherwise left in lurch due to non-FDI compliance in one or two projects. “There have been many instances in the past where real estate companies have faced rejection from the government for bringing in FDI owing to non-compliance in one or two projects out of 18-20 projects. The law should allow FDI to a project as a whole at the entity level, even if some of the projects do not measure up to the FDI guidelines,” real estate consultant Jones Lang LaSalle Meghraj MD Anuj Puri said. The real estate industry has also urged the government to waive the condition of three-year lock-in period for pre-IPO investment by overseas entities and treat them as portfolio investment rather than FDI. The matter is also under active consideration of the DIPP.
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