Strict norms for FDI in real estate
The government has suggested tighter rules for foreign direct investment (FDI) in real estate in India which will bar a foreign company from repatriating funds even after the mandatory three-year lock-in period in an Indian company.
The new norms will make it mandatory for foreign companies to complete at least 50% of the project within five years from the date of project conception.
The finance ministry recently rejected two such proposals of international builders wishing to exit Indian operations. Though they have completed three years mandatory lock in, the government has refused the exit as they failed to honor criterion of minimum project completion.
The new policy also restricts the investor or the investee to sell underdeveloped plots. There are several instances where FIPB rejected the exit proposals of private equity firms. A Pune-based realty company Kakade British Realties, who had asked for repatriation of capital after 3 years but had not adhered to the minimum construction norm in the project, is refused to exit.
Another proposal of Bangalore-based Aquea Realty was also turned down by FIPB last month on similar grounds. The government wants to make sure that there is proper progress in construction for those projects where FDI is investing.
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Source: Financial Express
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