100 percent FDI to be allowed in industrial parks

Dec 13, 2007, 8:11 GMT

New Delhi, Dec 13 (IANS) India will soon allow 100 percent foreign direct investment (FDI) for setting up industrial parks as part of an overarching and progressive review of its FDI policy.

With Commerce and Industry Minister Kamal Nath saying that the new FDI policy will be taken up for cabinet approval next week, sources privy to these developments revealed that FDI up to 100 percent under the automatic route would be allowed for setting up industrial parks, subject to some conditions.

Given the strident opposition to special economic zones (SEZs) in different parts of the country, this may well be an alternative strategy to promote large-sized industrial clusters, the sources said.

This is in line with the government's thrust on manufacturing and attracting large dollops of FDI, they added.

The Department of Industrial Policy and Promotion (DIPP) has specified that FDI up to 100 percent would be allowed in any industrial park that is an area allotted for the development of infrastructure, or built-up space with common facilities, or earmarked for industrial use.

However, only a handful of industrial activities would be permitted in these industrial parks.

These include manufacturing, electricity, gas and water supply, post and telecommunications, software publishing, consultancy and supply, data processing, database activities and distribution of electronic content, other computer-related activities, research and experimental developments on natural sciences and engineering, business management consultancy activities and architectural, engineering and other technical activities.

Since size is playing a part in the opposition to SEZs, some key ground rules have been laid down for the industrial parks, the sources said.

An industrial park would comprise a minimum of 10 units and no single unit shall occupy more than 50 percent of the allocable area.

The minimum percentage of the area to be allocated for industrial activity shall not be less than 66 percent of the total allocable area.

© 2007 Indo-Asian News Service