The Government is reportedly contemplating a move to liberalise FDI norms for the real estate sector. According to a financial daily, the Commerce Ministry has proposed waiver of two conditions. One is the three-year lock-in on foreign investment and the second is the minimum investment criteria.
The recommendations have been put forward for real estate projects, including hotels in a bid to boost the tourism and hospitality sector, the business newspaper says. At present, 100% FDI is permitted in hotels and tourism as well as real estate, it adds.
However, there is a three-year lock-in on FDI in real estate projects. What's worse, if an investor wants to exit real estate projects before three years, it will have to take a prior approval of the Foreign Investment Promotion Board (FIPB).
Then there are other conditions such as development of at least 10 hectares of land, completion of at least 50% of the scheduled construction in five years in addition to the minimum capitalisation norms. These conditions do not apply to the hospitality sector, the financial daily says.
The proposal may face resistance from the Reserve Bank of India ( RBI) and the Finance Ministry, the newspaper report says. The RBI has been seeking curbs on FDI in real estate and had written to the Finance Ministry asking it to make FIPB approval mandatory for foreign investment in the sector, it adds.