In the event, both have recommended that FDI be allowed automatically only up to a limit of 51 per cent, and in case more equity is sought in a project, this should be referred to the Foreign Investment Promotion Board (FIPB).

In addition, the Finance Ministry has also recommended that there be a lock-in period of three years before any funds can be repatriated. It has pointed out that a similar lock-in period applies to all NRI investment, and that the Sodhani Committee which examined relaxing this, eventually felt that no change should be made. The Urban Affairs Ministry, however, has rejected most of these suggestions, stating thatthe acute shortage of funds in the country necessitated that fully funded foreign projects be allowed.

The ministry says local partners do not have the funds to pay for 49 per cent of the project, and that this ensures that no big projects take off. The ministry also says that one of the reasons NRIs are not investing too much is because the repatriation conditions are too stringent.

The ministry sent its proposal to the Cabinet last year along with the comments of various nodal ministries. Later, the proposal was referred to a Group of Ministers (GoM), where it now lies in suspended animation.

The salient features of the proposal are: permitting 100 per cent equity by FDI in the housing and infrastructure sectors and ensuring that 10 per cent of the area developed is earmarked for the Economically Weaker Sections (EWSs).