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Business News/ Money / Govt may scrap 3-year lock-in for FDI in real estate
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Govt may scrap 3-year lock-in for FDI in real estate

Govt may scrap 3-year lock-in for FDI in real estate

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New Delhi: To boost foreign direct investment (FDI) in real estate, the government may remove the mandatory three-year lock-in period for overseas investments in the sector.

The department of industrial policy and promotion (DIPP) has proposed this move, with a draft cabinet note on the proposal being circulated for inter-ministerial consultations. Doing away with this lock-in period has been a long-standing demand of Indian developers as well as foreign investors.

The government had permitted 100% FDI in the sector in 2005. However, this was subject to certain conditions such as a minimum capitalization of $5 million by the foreign investor and non-repatriation of the original investment for a minimum period of three years.

The liberalization of the real estate sector led to FDI inflows increasing from $151 million in 2005-06 to $2.03 billion in 2008-09. DIPP now argues that no sector, except defence, has a lock-in period. “Based on experience, this condition no longer seems necessary," a DIPP official said on condition of anonymity.

cnbctv18@livemint.com

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Published: 23 Nov 2009, 09:33 PM IST
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