Norms for 100% FDI in realty sector

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.