NRI
shall allow to invest real estate sector, mass housing
and agriculture, Industry chamber requested
New Delhi, May 9, 2005
UNI
Industry chamber Assocham today sought
modifications in Foreign Exchange Management Act (FEMA)
to enable NRIs and people of Indian origin (PIOs)
to invest in mass housing and real estate development
including agriculture and plantation.
At present, FEMA allows PIOs and NRIs to invest only
in town planning and small real estate development,
but restricts them from investing in mass housing
or plantations.
In a representation to the government, Assocham President
Mahendra K Sanghi stressed the need for opening up
real estate sector, mass housing, agriculture and
plantations for PIOs and NRIs to help generation of
employment opportunities.
Besides, this would also make NRI/PIOs investment
partners for growth process as in the case of China,
which receives huge forex resources for FDI from its
expatriates Chinese.
The Chamber has further pointed out that with the
present government’s focus on agriculture, it
would be logical if the agriculture sector including
plantation are opened up for PIOs to improve its yields
and productivity as there will be no threat if these
sectors are thrown open.
Mr Sanghi also said Export Earnings Foreign Currency
(EEFC) should be made fully convertible as a prelude
to Capital Account Convertibility (CAC). These accounts
should also be interest bearing at global rates and
the credit facilities against its collateral be also
allowed.
The chamber has suggested that in the current liberalised
FEMA scenario, RBI may permit netting off export receivables
against import payments through various commercial
banks as is done in respect of units functioning in
special economic zones.
The central bank, however should prescribe certain
parameters in this regard to facilitate easy settlement
of payments and reduction in transaction costs.
It has also demanded that the power of compounding
a penalty for contraventions under FEMA should be
transferred from Enforcement Directorate (ED) to RBI
to give a greater level of comfort to individuals,
investors and corporates.
Since RBI is the Central Bank and is fully abreast
of financial difficulties of the trade and industry,
it would be very beneficial to the corporates in the
international competitive scenario
