Dubai World arm?s repatriation plea faces regulatory hurdle

Dubai World?s real estate development arm Limitless Holding?s proposal to repatriate its investment in its joint venture with DLF for developing 9,300-acre Bidadi (Karnataka) project is facing regulatory hurdles.

The department of industrial policy and promotion (DIPP) ?the FDI policy making body ? has put the proposal on hold as it will not allow the company to repatriate funds without substantial evidence. This is because the three-year mandatory lock-in period has not lapsed, since the initiation of the project.

The department may ask the Karnataka government to furnish factual position of the project, wanting to know whether the project has been cancelled by it, a senior official said.

DLF-Limitless, in its application to the government has requested for granting Limitless an early exit from the JV on the grounds that Karnataka government has not allotted the required land for the project over the last two years. With DLF and its JV partner deciding to exit the BMRDA?s Bidadi Satellite Township Project near Bangalore, Limitless had sought refund of Rs 200 crore.

The government?s permission is a must, since there?s a lock-in of three years for repatriation on foreign firms if they invest in real estate projects in India.

In October 2007, DLF and Limitless Holdings through a 50:50 joint venture had emerged the sole bidder for the project, christened ?Knowledge Park?.

According to DLF-Limitless’ proposal with the FIPB, since the Karnataka government could not acquire land for the project, the two pulled out of the project in 2009. Subsequently, the Karnataka government had returned Rs 400 crore to the joint venture firm. To get its share of Rs 200 crore, Limitless now needs the government?s approval since three years have not elapsed from the time the funds were brought it. In its proposal to the foreign investment promotion board (FIPB), Limitless has urged for allowing it to transfer the equity held by it in the JV to DLF.

It has said that after the transfer of funds from Limitless to DLF, the latter will get enough leeway to utilise funds in a manner it wants or utilise in any other realty business.