Foreign Direct Investment in industrial parks to get waiver

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 conditionalities 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 on Wednesday.

All the departments concerned have conveyed its support to the proposal
which was put forward by the department of industrial policy & promotion
(Dipp) last October, highly-placed government sources said. This would
enable the CCEA to exempt industrial parks from the conditions specified
for FDI in real estate under Press Note 2, they added. The proposal
has been pending for three months due to differences of opinion within
the government.

Apart from a minimum capitalisation of $10 million for subsidiaries
of foreign companies and $5 million for joint ventures, Press Note 2
also specifies that FDI in real estate projects would be allowed only
in the case of projects spread over 10 hectares in the case of serviced
housing plots. In the case of construction projects, the minimum built-up
area has been specified as 50,000 sq m. A three-year lock-in is also
mandatory.

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.

Apart from industrial parks, the agenda pending before the CCEA includes
permission for FDI in commodity exchanges, credit information companies,
and liberalisation of foreign investment in titanium mining, civil aviation
and petroleum & natural gas. The Dipp has proposed that 49% FDI
should be allowed in commodity exchanges and credit information companies,
with FII investment capped at 24%. No single entity should hold more
than 10% in these two sectors, the department has said.

In the case of civil aviation, the proposal is to allow 75% FDI in
non-scheduled airlines, chartered carriers and cargo operations, apart
from ground-handing services. NRI investment of 100% would be allowed
in these segments through the automatic route. The Dipp has also proposed
that 100% FDI should be allowed in the case of MROs, flight training
institutes, technical training institutes and helicopter/seaplane services.

Source: http://economictimes.indiatimes.com/

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