Latest Property News on 'Foreign Direct Investment in India'

Govt has approved 190 New FDI Proposals this Year

The government today said that the country has received as many as 238 Foreign Direct Investment (FDI) proposals so far this year. “During the year 2009, (up to November), 238 proposals were received,” Minister of State in the Ministry of Commerce and Industry Jyotiraditya M Scindia said in a written reply to the Lok Sabha.

Out of the 238 proposals, the government has approved 190, while 13 were rejected and 6 were withdrawn or closed. Around 29 proposals are either listed for consideration or to be listed in the fourth session, the minister added. During the last three years, Foreign Investment Promotion Board (FIPB) has received a total of 1,102 FDI proposals, out of which 286 were received in 2006, 393 in 2007 and 424 in 2008, he added. Read More »

Govt may not Consider FDI in Multi-Brand Retail

The government plans to expressly clarify that foreign direct investment (FDI) in multi-brand retail is no-go territory, dashing the hopes of Indian retailers expecting that the new rules announced earlier this year would allow them to bring in overseas partners and capital. The commerce and industry ministry wants to ensure that the liberalised FDI policy does not lead to the unintended opening up of multi-product retail, a sector closed to foreign investment now, an official privy to the ministry’s plan said.

The move is likely to stymie the plans of those such as Pantaloon Retail, which is owned by the Future Group and operates the Big Bazaar, Food Bazaar, Pantaloon and Home Town chains of stores. Pantaloon Retail had initiated steps to restructure itself to take advantage of the new norms for counting FDI in the hope that it would be able to attract foreign investment. It was to have converted the listed Pantaloon Retail into a holding company and distributed assets and operations of the group among two subsidiaries. Read More »

Growing Concern over National Security Forces Govt to Tighten FDI Norms

Growing concerns over national security are forcing the government to tighten the foreign direct investment (FDI) regime, starting with pruning of the automatic route available to foreign investors pumping funds into various sectors. To start with, explosives and chemicals will be taken out of the automatic route, which is handled by the Reserve Bank of India. In the next stage, the government is also likely to introduce a more comprehensive security screening for sectors like refineries, civil aviation, defence production, power and real estate.

“The automatic route for FDI is under review now,” said a government official who asked not to be named. FDI into explosives and chemicals would have to be routed through the Foreign Investment Promotion Board (FIPB) — the nodal agency — once the proposed changes are finalised. The changes in FDI regime, suggested by the National Security Council (NSC) secretariat, follow increasing concerns over not just cross-border threat, but also escalating internal security issues like Naxalism, another official familiar with the situation said. To tackle the menace, the government has set in motion a process that will stress on the overriding importance of national security over others like FDI promotion. The NSC wants to ensure that all proposals in sectors deemed sensitive from the national security angle go through FIPB process for security clearance. Read More »

Emaar MGF Being Investigated for alleged violations of FDI Norms

Emaar MGF Land Ltd, which plans to hit the market with an initial public offer (IPO) soon, might be carrying a jinx of sorts. The developer of the Commonwealth Games Village 2010 is now under investigation by the Enforcement Directorate for alleged violations of foreign direct investment (FDI) norms. The ED believes the company diverted some of the FDI, meant for real estate, into “barred” sectors, including agricultural land. The company had on February 1, 2008 hit the market with an issue of 10.25 crore shares in a price band of Rs610-690 each to raise Rs7,000 crore. But it was forced to withdraw the issue after failing to find takers despite extending the closing date from February 6 to February 11 and rolling down the price band from Rs610-690 to Rs530-630. Barely 0.43 per cent of the shares on offer got subscribed as the markets tanked and investors turned wary.

Now, with investor sentiment gradually returning to normalcy, Emaar MGF is ready to hit the primary market again. In fact, the ED action comes just when it has filed a draft red herring prospectus with the Sebi for the second time, to raise up to Rs3,850crore, nearly half the amount it had planned to raise last year. Emaar MGF Land is a joint venture between the Dubai-based Emaar group, which claims to have operations in 16 countries, and MGF Development Ltd of India. The company bagged the contract for constructing the Commonwealth Games Village in Delhi in 2007. The project, spread across 118 acres, is to house over 8,500 participants from across the globe. The ED has found that the company brought FDI worth Rs7,000crore into India between 2005 and 2008, purportedly to invest in real estate. Read More »

Sri Lanka Targets USD 100-mn FDI from India by end-December

Sri Lanka is expecting a foreign direct investment (FDI) from India to the tune of USD 100-million by end-December, a senior Lankan Government official said on Thursday. “We are targeting FDI worth USD 1,000-million by the end of this year (2009) and India’s contribution this year is expected to be around USD 100-million,” Sri Lanka’s Minister of Investment Promotion, Navin Dissanayake, said here. He was in the city to meet with Indian investors, including big conglomerates such as the Tata group.

In 2008, Sri Lanka attracted a total FDI of USD 889-million out of which India’s contribution was USD 126-million, he said. “Last year, out of the USD 126-million FDI which came from India, a major share of around USD 100-million came from Bharti Airtel,” Dissanayake said. India’s largest mobile operator, Bharti Airtel, has started its mobile services in Sri Lanka under the Airtel brand. The company has announced a total investment of USD 200-million till 2012 in Sri Lanka. Bharti Airtel has also ventured into Seychelles, Jersey and Guernsey.

India widens foreign VC funds’ investment options

Indian regulators have opened the doors to foreign venture capital funds (FVCFs) beyond the select investment options they were being offered in recent times.

The decision, reflected in some of the communications between the Reserve Bank India and custodian banks of VC funds, could not only make life easier for foreign funds and widen the scope for their risk capital, but also boost foreign direct investment (FDI) in the country.

In the past one year, FVCFs, which were allowed to come in, were specifically told to stick to activities such as infrastructure, bio-technology, nano-technology, biofuel, IT-related activities for hardware and software development and a few other areas outlined by the government in the list of 10 sectors identified for tax benefits to VCs. Read More »

NSC Wants Stringent FDI Norms

The government is considering a sweeping review of its FDI guidelines following increasing risk of terror funds being parked in the country and other investments fraught with security implications. The National Security Council has, in a secret report, suggested enactment of an umbrella legislation — National Security Exception Act — to authorize the government to suspend or prohibit any foreign acquisition, merger or takeover of Indian companies that could be considered damaging to national interest. The finance ministry is likely to be the nodal point for implementation and monitoring of the security guidelines.

In effect, the council proposes to subject foreign participation in sensitive sectors and locations in India, coming from ‘‘countries and origins of concern’’, to special security screening both at the time of approval as well as during the entire period of their operation. This will apply to funds coming through both automatic and FIPB routes, as well as the fast track council (FTC) projects. The NSC recommendations would impact existing and potential FDI, M&As, allotment of preferential shares to a foreign entity, and all government contracts, tenders and agreements (including PPP and BOT projects) in seaports, airports, telecom, internet services, petroleum refining, gas pipelines, hydrocarbon exploration, shipping, roads, waterways, drugs and pharma, networking hardware, data processing, defence and metallurgy among others. Read More »

43% Drop in Foreign Direct Investment

India received $2.2 billion foreign direct investments (FDI) in May this year, department of industrial policy & promotion (DIPP) secretary Ajay Shankar said. There is a 43% drop in the FDI inflow in May 2009 compared to $3.9 billion received in the same month of the previous year. The inflow of foreign capital into the country will improve now, as the country’s industrial output in June looks “promising,” Mr Shankar said on the sidelines of a seminar by Confederation of Indian Industry (CII). “We think, with liquidity improving and confidence in the economy rising, these (FDI) numbers should pick up,” he said. The government had scaled down the FDI target by $5 billion from $35 billion last fiscal.

In April 2009, FDI inflow had fallen by 38% to $2.34 billion from $3.74 billion a year ago. In the calendar year 2009 up to April, FDI inflow into the country slipped by nearly 46% from the year-ago period to $8.5 billion, as per the latest figures released by DIPP. Inflow of foreign capital dried up as foreign investors were reluctant to put their money in risky emerging markets but India’s 6.7% growth in 2008-09 when developed countries struggled with recession is expected to bring foreign investors back. In the first six months of 2008-09, FDI inflow was $27.3 billion compared to $24.5 billion in 2007-08. Cumulative FDI inflow from April 2000 to March 2009 was about $90 billion, as per DIPP data. Read More »

3-Yr Lock-In On FDI in Real Estate- Govt

The government is weighing the impact of a possible three-year ban on stake sale by foreign investors in real estate projects, a decision that could affect future capital inflows into the sector. Real estate developers had recently urged the government to reinterpret a provision in the foreign direct investment guidelines, so as to stop overseas investors from withdrawing their funds, beyond the minimum capital of $5 million, before three years of the initial investment.

This, they said, will help them tide over the current liquidity crisis. However, the commerce ministry is concerned that such a measure could be counter-productive. The government wants to keep the foreign investment policy as flexible as possible since the country now needs foreign capital to sustain the growth momentum. For any foreign investor, the exit strategy is as important as the entry strategy. If it is difficult to withdraw capital and redeploy it in another sector, then foreign investors could become reluctant to invest in real estate. Read More »

India Goes Down to Third Spot in FDI Ranking

India has dropped to third place in global foreign direct investments (FDI) this year following the economic meltdown, but will continue to remain among the top five attractive destinations for international investors during the next two years, says Unctad (United Nations Conference on Trade and Development) in a new report on world investment prospects. Last year, India was ranked second in global FDI flows after China. While China continues in the top place, the US climbed up to second place this year, thanks to a surge in investments by Chinese and Indian companies, who acquired several sick American firms.

However, overall FDI prospects for India remain buoyant, says James Zhan, a senior Unctad official and one of the authors of the latest report. “India will remain among the top five destinations,” said Zhan, suggesting that the Bric countries will hog most of the investment flows once FDI growth starts picking up after 2010. The report titled, ‘World Investment Prospects Survey 2009-2011’ has listed FDI prospects by industry, particularly the “business-cycle-sensitive” industries such as automotives and other transport materials, metal and non-metal products and chemicals. It also spells out FDI prospects by host region. Read More »