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Tuesday, July 31, 2001

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No automatic approval for FDI in housing

By Our Special Correspondent

NEW DELHI, JULY 30. The Central Government has decided to allow foreign direct investment in the housing sector only if the investor was willing to undertake the overall development of a city or a sizable segment of a city or region as an integrated unit.

According to a recent decision taken by the Union Urban Development Ministry following a proposal from the Ministry of Commerce and Industry, there would be no question of automatic approval for foreign direct investment in this sector.

The Government would support such investment only ``if a city or a sizable segment of a city or a region is proposed to be developed as an integrated unit with all urban infrastructure facilities along with housing.''

Each proposal for FDI would be minutely examined on merits. There would be no automatic approval.

The Government was not considering any proposal to allow foreign direct investment in the housing sector though demand has been voiced by different quarters for allowing such investment to bridge the huge resource gap to meet the housing demand, official sources said.

However, under a scheme which has been implemented by the Ministry, non-resident Indians (NRIs) and overseas corporate bodies, which are predominantly owned by NRIs with at least 60 per cent beneficial interests in them, are allowed to invest in housing and real estate development sector.

The scheme has had the potential of attracting huge investment in the housing and infrastructure development sectors by NRIs and corporate bodies owned by them. The repatriation and other benefits have also been made available under the scheme to motivate NRIs to invest in real estate development in India.

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