Relax FDI norms to allow investors to exit early: FICCI, E&Y

NEW DELHI: The government should modify the rules for foreign direct investment ( FDI) in the real estate sector and allow investors to exit before three years, which is the current lock-in period, industry body FICCI said on Wednesday.

According to a report jointly prepared by FICCI and Ernst & Young, investors should be allowed to exit before three years with prior Foreign Investment Promotion Board (FIPB) approval if the project is completed.

It also said that if "the project could not be initiated due to lack of statutory clearances", then also investors should be allowed to leave.

FDI rules should be modified in case a dispute arises between the resident and the non-resident, and the non- resident wishes to exit the project.

The report -- Realty Decoded: Investing Across Borders -- also urged the government to create a realty regulatory body to organise the sector.

The regulator "should play a significant role in organising and lending credibility to the real estate sector by addressing sensitive issues such as the procurement of quality material, project management, architecture, achieving a disciplined workforce, marketing and estate management".

Besides, the report said that various levels of approvals should be streamlined to have better and quick implementation.

"In India, more than 52 approvals are required for housing and real estate projects, which can take up to two years to clear, as several agencies are involved in providing clearances," it pointed out.

FICCI and Ernst & Young also urged the government to award industry status to the realty sector.