Hectic lobbying is under way to bring about a small change in the way one interprets a rule on foreign investment in property — a change that could hurt overseas investors but rescue several Indian realtors.
According to the foreign direct investment regulations, a foreign investor has to bring in a minimum $5m to participate in a joint venture with an Indian developer while the rest of the money can be brought in at a later point, may be in tranches. FDI rules say: 'Original investment cannot be repatriated before a period of three years from completion of minimum capitalisation.'
Till now, the interpretation has been that the three-year lock-in applies only to the ‘original’ or ‘minimum’ investment of $5m and not to the entire money that the foreign investor puts in.
'We are expecting a change...There have been representations to the government to clarify that the repatriation rule and the lock-in should apply to the entire investment, and not just the initial capitalisation of $5m,” said a large shareholder of a top property firm.'
Times of India