CCEA may clear FDI in housing

The matter was referred to a Group of Ministers GoM headed by Jaswant Singh, external affairs minister. Urban Development Minister Ram Jethmalani, Finance Minister Yashwant Sinha and Human Resource Development Minister Murli Manohar Joshi are the other members of the four-member panel.

The GoM had a meeting in December last after which Jethmalani circulated a personal note to the panel members giving them a certain time frame to give their replies. Failing this it was construed that they would have nothing to say against the proposal so that it could be sent to thecabinet for its final approval.

FDI in the housing sector follows the repeal of Urban Land Ceiling and Regulation Act, popularly known as ULCRA. It also aims at boosting housing activities in the country besides removing shortage of dwelling units greatly and also to make houses available at cheaper rates. Repeal of ULCRA has also freed land hitherto locked in litigation for utilisation of housing and corporate complex.

The FDI proposal has already met with stiff resistance from local builders who are unable to face global competition especially at a time when there is a lull in the construction activity.

The Narasimha Rao regime had earlier restricted FDI inflow through overseas corporate bodies, persons of Indian origin and non-resident Indians having joint venture stake in a corporate in India. There was a three year cap on repatriation of profits on the funds invested.

Since then over Rs 515 crore have been invested for housing and urban infrastructure development under the original scheme.Jethmalani had told parliament during the budget session that a number of multinationals were waiting to invest in the housing sector in India and his ministry was flooded with queries in this regard.

Meanwhile, foreign direct investment FDI approvals in the first quarter of 1999 increased by 25 per cent to 2.6 billion from 2.0 billion in the same period last year. The inflow of foreign investment during January-March this year also increased by 49 per cent to 1.4 billion from 0.9 billion in the corresponding period of 1998, industry ministry sources said.

The approvals and inflows were higher by 34 per cent and 58 per cent respectively in rupee terms in the first three months of 1999 compared to the same period last year, the sources said.

The maximum FDI during the period was attracted by transportation sector, including automobiles and auto components, cornering 26 per cent of the total investment.