Left-weary Centre defers move to allow FDI in construction

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New Delhi, Feb 17: Keen on avoiding a showdown with the infuriated Left, the Cabinet on Thursday deferred the proposal to allow FDI in the construction sector. A surprised Left has cautiously welcomed the Cabinet decision, asking why any relaxation of FDI norms was needed at all in the sector.

The Cabinet note moved by the department of industrial policy and promotion (DIPP) had sought to replace the minimum land area norm of 100 acres for FDI in realty by a new relaxed norm of minimum constructed area of 50,000 sq ft.

The department has also proposed doing away with the stipulation that FDI in realty should be only in the housing sector. It said foreign money could be allowed in all kinds of construction projects including shopping malls, hotels, resorts etc, provided there was no trading of undeveloped land.

The nodal FDI department has also suggested that the government should refrain from earmarking the areas for various amenities, which had proved to be an unnecessary interference with commercial decisions of foreign investors.

Leaders of Left parties told FE that they had conveyed their opposition to the proposals to the government. CPI general secretary AB Bardhan said he had informed commerce minister Kamal Nath of his party’s views on the issue when the minister had called him up on Thursday afternoon.

The veteran CPI leader told FE that the Left parties were opposed to relaxing FDI in “urban development” as it would lead to a huge increase in real estate prices. “Land costs would become sky-high if FDI is allowed into the sector,” he asserted.

CPI national secretary D Raja asked, “First of all, we would like to know what is the government’s objective in bringing in more FDI into the sector,” adding, “The government’s concept of urban development has to change.”

“It seems that currently, their (the government’s) priority lies in promoting commercial interests in urban development. This will only lead to a greater widening in the urban, rural divide,” he added.

“The government should first concentrate on providing decent shelters and more civic amenities to the poor, not promote commercial interests,” he asserted. “Otherwise,” he added, “it will only play into the hands of the land and real estate mafia.”