Norms for 100% FDI in realty sector
By Our Infrastructure Bureau | 05 Jan 2002
New Delhi: The
Central government has announced a $10-million minimum
capitalisation standards, along with a three-year lock-in
period, for 100-per cent foreign direct investment (FDI)
in developing integrated townships, which include housing
complexes, commercial premises, hotels, resorts, city-
and regional-level urban infrastructure facilities like
roads and bridges, mass rapid transport systems and manufacture
of building materials.
The guidelines say that for joint venture companies with
foreign partners, the minimum capital will have to be
$5 million. The companies will have to register under
Indian laws. All cases of foreign investment in this sector
will be processed by the Foreign Investment Promotion
Board (FIPB), on recommendation by the ministry of urban
development and poverty alleviation and other concerned
departments.
The urban development ministry will develop an exclusive
cell to deal
with such cases. Only those companies which have a record
of successful execution of such projects elsewhere will
be allowed to develop integrated townships.
Any company that takes up integrated township development
will have to build up a minimum area of 100 acres in compliance
with the local rules and bylaws. In the absence of any
rules and bylaws, the guidelines instruct that a minimum
of 2,000 dwelling units for about 10,000 people will need
to be developed by the investor.
The company will also have to compulsorily complete 50
per cent of the development work within five years from
the date of possession of the first piece of land. But
if the investor intends to exit earlier due to reasons
beyond his control, it shall be decided by the FIPB on
a case-to-case basis.
The norms also insist that the land with assembled area
for peripheral services like a police station or a milk
booth will be handed over free of cost to the government,
while the developer will retain the lands for community
services like a school, shopping complex, community centres,
ration shop or a hospital. These services will be developed
by
the developer himself and shall be made operational before
the houses are occupied.
The developer will also have to properly develop playgrounds
and parks and make it available to local authorities free
of cost. For companies investing in SEZs (special economic
zones), the FIPB will have the right to accord exemption
from any of the conditions on a case-to-case basis.