To attract more foreign direct investment (FDI) the Government is likely to take a decision on easing of norms for the construction sector in the cabinet meeting on Wednesday.
"We have already floated the Cabinet note and hoping that it will take decision in the meeting," sources close to the development told The Pioneer.
The Department of Industrial Policy & Promotion (DIPP) has floated a Cabinet note proposing to bring down the minimum built-up area requirement for FDI in construction projects from 50,000 sq metres to 20,000 sq metres. It has also proposed reducing the minimum capital requirement for such projects from $10 million to $5 million.
Though 100 per cent FDI is permitted through the automatic route in the construction sector, Finance Minister Arun Jaitley had in the Union Budget in July announced plans to liberalise norms to "to encourage development of Smart Cities, which will also provide habitation for the neo-middle class".
Countries such as the US, Japan and UK have all expressed interest in investing in smart cities and the more liberal norms will ease the flow of such investments
The existing post completion lock-in period of three years for investors, however, will not be relaxed to avoid early exits.
The Union Cabinet recently relaxed FDI rules for the defence sector, increasing the FDI cap from 26 per cent to 49 per cent. It also allowed 100 per cent foreign investments through the automatic route in a number of areas in the railways including high-speed trains, railway line, passenger terminals and coaches manufacturing and maintenance facilities.The new rules in both sectors have been notified.The Government, however, is reluctant to allow FDI in multi-brand retail as it believes that it could hurt small retailers.It is also not willing to open up the e-commerce sector to foreign investments for now.