NEW DELHI: Chinese real estate giant Dalian Wanda, planning a record $10 billion investment in India, wants to be allowed to sell plots that are undeveloped or only partly developed in its proposed industrial park in Haryana as one of the many relaxations the company is seeking from the Indian government. India’s foreign direct investment (FDI) policy, however, only permits the sale of developed plots, which means trunk infrastructure–roads, water supply, street lighting, drainage and sewerage–needs to be in place. “The sale of such plots would help the company generate revenues,” a senior government official said.
“It however cannot be allowed as it goes against the prevailing policy.” Dalian Wanda couldn’t be reached for comment. Owned by China’s richest man Wang Jianlin, the Wanda group is the world’s largest property developer with interests in culture and tourism, e-commerce and department stores. The group recently announced it would start work on a 13 square kilometre industrial park in Sonepat. Various companies from across the world will build and operate homes, hotels and factories within the park, according to the Haryana government.
In June last year, the Wanda group had expressed its interest in building five industrial and theme parks besides shopping malls in India. India allows 100% foreign direct investment in townships through the automatic route. The Chinese company had recently presented a wish list of concessions it wants from India, many falling outside of the current policy framework. It wants to be allowed to bring in the $10 billion as external commercial borrowings (ECBs) against the permitted limit of $750 million.
The company has also sought concessions that are applicable to special economic zones such as breaks on corporate and service tax besides customs and import duties. It also wants these concessions extended to companies that set up units in its project. The Department of Industrial Policy and Promotion (DIPP) is in talks with various government departments and regulators to see if the Wanda group’s demands can be met given the size of the proposed investment, which will amount to several times the total FDI inflow from China to India.
Between 2014 and 2016, the total inflow stood at $956 million. Several government initiatives such as Make in India, the Smart City programme and Digital India have pushed for increased Chinese investment in capital-intensive sectors in India.
Forget Sops Instead of seeking endless concessions and relaxations of rules, international developers seeking to foray the Indian market need to leverage their expertise to offer attractive value for buyers. They must also commit to strict timelines for project completion. Given the huge potential for real estate development here, building up brand equity with sound implementation would pay rich dividends, for years. It would make sense to have presence in multiple segments of the market, and aim at volumes growth.
Credits ET Realty