The new norms, likely to be notified soon, may have the minimum locked-in investment increased from the current level of $5 million for a joint venture with an Indian firm or a project that involves Indian shareholders. At present, foreign investments above $5 million are fully tradeable.
This lock-in cap could be raised to even the total foreign investment in a real-estate project, a government official told FE. According to industry estimates, most realty firms or project are getting not less than $40 million of foreign investments each via the pre-IPO placement route. Once the new norms are in place, the entire foreign investment could be locked in.
Further, the RBI was expected to increase the lock-in period for such investment from one year to three years while treating it as FII, the official said.
New norms may have minimum locked-in investment increased from the current level of $5 mn
The issue of pre-IPO foreign investments has been discussed with various ministries. But now, a consensus seems to have emerged. The issue has more or less been resolved. The RBI may use its discretionary powers to issue the fresh norms in this regard, the official said.