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FDI in industrial parks to get waiver
January 30, 2008: RBI might have disappointed realty companies that were looking forward to cheaper home loans to revive growth, but the government is ready with a booster dose: exempting foreign direct investment (FDI) in industrial parks from conditions like minimum capitalisation and lock-in period of three years. Differences within the government over a proposal to this effect have been resolved and the Cabinet Committee on Economic Affairs (CCEA) is scheduled to take it up soon.
All the departments concerned have conveyed its support to the proposal, which was put forward by the department of industrial policy & promotion earlier in October. This would enable the CCEA to exempt industrial parks from the conditions specified for FDI in real estate under Press Note 2. The proposal has been pending for three months due to differences of opinion within the government.
In the case of industrial parks, the condition for allowing 100% FDI through the automatic route is construction of at least 10 units out of which no one should occupy more than 50% of the allotted area. At least, 66% of the total area should be allocated for industrial activities like manufacturing, telecom, software, data processing, consultancy and other computer-related businesses. Power, gas and water supply would also be allowed in such industrial parks. Business and management consultancy, engineering, architectural and R&D activities in natural sciences is also allowed.
Source: The Economic Times