The cabinet committee on economic affairs (CCEA) has allowed over Rs2,000 crore foreign investment in Orange Realty Pvt Ltd. But, now the cabinet itself is divided over the decision to allow the New Delhi-based company to bring in foreign direct investment (FDI) worth Rs2,051 crore.
The cabinet committee on economic affairs (CCEA) on Monday allowed an investment company `IRVO-III' to invest in Orange Realty. On completion of the investment, Orange Realty will become a foreign-owned Indian company, which will be able to make further downstream investments, including Rs2,051 crore in a special economic zone project.
At least three senior ministers, including home minister P Chidambaram, have opposed the company's FDI proposal on the ground that the identity of its promoters was unclear.
A section of the UPA is planning to approach prime minister Manmohan Singh against the proposal by Orange Realty Private Ltd.
The Foreign Investment Promotion Board (FIPB) had, during its meeting on 9 January, forwarded the proposal by Orange to get Rs2,051 crore from a Mauritius-based company. In its proposal, Orange had said it wanted to undertake further downstream investments.
Since the investment exceeded Rs600 crore, it required the CCEA's approval, Chidambaram said. ''IRVO-III has a large of number of well-known investors. That company is now investing in Orange Realty Pvt Ltd,'' he said after the CCEA meeting.
The company had received $120 million (Rs 600 crore) from SIERO Investment holding, an investment company in Mauritius, according to an earlier commerce ministry press release.
The government allows 100 per cent FDI in the real estate sector subject to certain norms relating to project details.
The approval also comes at a time when funds inflow has slowed to a trickle owing to the global financial meltdown.