The ministry has reportedly opposed the proposal from the urban development ministry, sources said. Instead, it prefers a 49 per cent cap on foreign equity and a lock-in period of three years for investments and repatriation of profits, subject to payment of taxes.

The foreign companies, when allowed, can make FDI either through their subsidiaries or by joining hands with local partners.

To reach a consensus, the Prime Minister's Office has appointed a committee comprising four ministers representing industry, commerce, finance and urban development ministries. The panel will submit its report which may further delay the introduction of reforms in the sector.

The exercise has been initiated on the issue before it approaches the cabinetfor final approval, sources said. Even the industry ministry has opposed 100 per cent FDI in the sector because of "problem at the implementation stage."

The urban affairs ministry is understood to have explained in its several letters to North Block that it recommended opening up of the sector to foreign investors because of the size of the fund requirement.

While funds of this size are not available in the domestic market, it is not advisable to allow domestic players to tap external borrowings route owing to high cost of funds and consequent burden on servicing of debts.

The ministry has pleaded measures such as earmarking 10 per cent of the housing projects by foreign investors for the economically weaker sections to meet the Government's objectives of providing them shelter at affordable prices.

According to officials, the group of ministers will prepare a final note for the cabinet on the issue in the housing and urban infrastructure sector after getting a response from the financeministry.

"We will incorporate the stand of the finance ministry," said a senior ministry official. The finance ministry's reservation was also reflected in the budget speech when Sinha, while announcing concessions for the housing sector, maintained a stoic silence on the FDI issue.

While recommending the 100 per cent foreign equity and removing the existing 60 per cent cap on equity by non-resident Indians and other corporate bodies, the draft proposal from the urban affairs ministry also recommends a three year lock-in period for repatriation of origional investment by overseas companies.

The criteria for forging ventures would include efficiency and productivity, prevailing management practices and willingness to transfer technology for upgradation of housing techniques.