Determined to see that the prime railway land in the heart of the capital is commercially developed by private players, the government has made an exception to the strict three-year lock-in rule for foreign investors.

Foreign direct investment (FDI) norms for real estate development clearly state that all foreign investment has to be locked in for a minimum of three years.

However, what may become a test case for other real estate players, the government has allowed Mauritius-based Green Destinations Holdings, involved in a special purpose vehicle (SPV) with Indian partner Parsvnath Developers (PDL), to repatriate in less than three years. No such relaxation has been extended to any other realty developer since the rollout of the FDI policy.

The move will not only enable Green Destinations Holdings to exit the SPV with PDL but will also allow the latter to continue with the commercial development of the 15 hectares of prime railway land in the capital. Sources said the permission had the blessings from UPA ally Trinamool Congress, which is at the helm of affairs in the railway ministry.

Recently, the Rail Land Development Authority (RLDA) had red-flagged a 51:49 SPV formed between PDL and Green Destinations Holdings on account of certain violations. However, PDL incorporated another company to execute the same project with help from its foreign partner Green Destinations Holdings, which agreed to transfer its equity valuing at around R198 crore from now defunct SPV to PDL. This is not allowed under the current FDI norms in real estate sector.

When the matter came before the foreign investment promotion board recently, the collective view was in favour of giving early exit to the foreign developer from the now red-flagged SPV. ?The board held the view that this is the fit case for waiver of the lock-in period, particularly considering the fact that the investment was sought to be channeled into a new entity for the implementation of the same project,? a government official said.

In the past, DLF Limitless also sought the government nod to allow their foreign partners (Dubai-based co-promoter Limitless) to repatriate its R200-crore investment in the company by selling the entire stake to the Indian partner. The FIPB did not budge from its stand that the foreign partner would have to wait for the prescribed three-year lock-in period before making an exit.