Further relaxation of FDI norms in Realty on cards

FDI to hit $100 bln mark by 2017

India aims to attract FDIs worth $50 billion (approx Rs 2,31,800 crore) by 2012 and cross the $100 bln mark by 2017. To ensure this the government is contemplating several reforms. On the project investment front, the Union Ministry of Commerce is planning to set up a panel comprising state industrial ministers, which will recommend measures to remove procedural difficulties faced while setting up a business in India.

On the FDI front, the Department of Industrial Promotion and Policy (DIPP) is mulling over a proposal to further relax the FDI norms for the real estate sector. A proposal is currently being circulated by the DIPP for inter-ministerial consultations intends to remove the mandatory three-year lock-in period for FDIs in this sector. The government had put the lock-in clause while allowing 100 per cent FDI in the sector in 2005.

Presently, 100 per cent FDI is allowed in the sector under the automatic route in townships, housing, built-up infrastructure and constructiondevelopment projects that include housing and commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure.

FDI: April-Sept 2009

The total FDI inflows (including reinvested earnings and other capital) during the first half (April - Sept 2009) of the current fiscal at $17.7 billion indicated a marginal increase over such inflows of $17.2 bln in the corresponding period in the previous fiscal. However, FDI in the form of pure equity inflows during the first six months period dipped considerably. As against $17.2 billion received during April-Sept 2008, only $15.27 bln were received during the current fiscal.

FDI Clearances:

In November 2009, the Union Ministry of Finance on recommendations of the Foreign Investment Promotion Board (FIPB) cleared 17 FDI proposals worth Rs 1,158.78 crore.

Among the major proposals which were okayed by the ministry were Electrosteel Castings' Rs 600 crore proposal to issue and allot eligible securities including equity shares and/or non-convertible debt instruments along with warrants, on private placement basis and Arcelor Mittal's Rs 503.37 crore proposal to infuse foreign equity into a company engaged in manufacturing cold-rolled semi-finished iron and steel products.

The proposals of Diversified Communication India to induct 100 per cent FDI in print media sector, Hathway Cable and Datacom's Rs 16.65 crore proposal for induction of foreign equity through the IPO route to undertake Cable TV services as multimedia system operator and as internet service provider category "A" licensee were also given a goahead.

Meanwhile, the ministry deferred a decision on 12 FDI proposals and rejected five on the recommendations of the FIPB. Jaipur IPL Cricket's proposal to infuse 100 per cent foreign equity by way of issue of shares was among the proposals that were rejected by the ministry. The proposals of Pepsico India and Eads Deutschland and L&T were once again deferred.