India accuses Emaar JV of $1.51bn forex violations

Gov't claims Dubai-backed developer violated foreign exchange rules over past eight years

(Photo for illustrative purposes only)

(Photo for illustrative purposes only)

The Indian government has accused Dubai-backed real estate developer Emaar MGF Land Ltd of violating foreign exchange rules with investments worth 86 billion rupees ($1.51bn) over the past eight years.

India's foreign investment rules allow real estate developers to raise money overseas and invest it in construction and development of property in the country, but they are not permitted to buy agricultural land with the funds.

In a statement, the Ministry of Finance said the company, a joint venture between Dubai's Emaar Properties and India's MGF Development Ltd, broke the central bank's foreign investment rules by using foreign funds to buy farmland since April 2005.

A government official with knowledge of the matter said it would wait for Emaar MGF to respond before initiating any action such as penalties, without elaborating further.

"We have not received any communication from the government authorities and hence we are not in a position to comment," said a spokesman for Emaar MGF in New Delhi.

Several developers have been buying agricultural land on the outskirts of India's big cities to build homes and offices for a rapidly growing population.

The rules forbidding the purchase of farmland using money raised abroad are designed to prevent speculative buying at arbitrary rates from poor farmers.

Emaar MGF set up operations in India in 2005.

The company, which builds homes, offices, shops and hotels, has made successive, unsuccessful attempts to list on the Bombay Stock Exchange since 2008.

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Posted by: Ibrahim

Dear Govt of India, First you need to come clean of all the corruption charges against you. Clear all the 'bureaucratic' hurdles you create for the foreign investors.I mean to say stop taking bribes and fire your ministers who take bribe... then all of them will follow the rules (if they had violated any).

Posted by: khdmohd

I hope this will not end as ETISALAT ( cheers ) did . All sings are leading to the same tragic ending of this Indian film ,,,,,

Posted by: harish man

typical backward allegations! happy to accept the money but even happier to fine/squeeze more from the foreign investor! i pity vodafone and emaar who have to deal with this level of bureaucratic imbecility...

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