ED issues Rs 8,600-cr forex violation notice on Emaar MGF
The directorate of enforcement has issued a show cause notice to one of India’s leading realty developers Emaar MGF to the tune of Rs 8600 crore for violating FDI rules under FEMA laws. Sanjib Kr Baruah reports.business Updated: Jun 04, 2013 23:55 IST
The directorate of enforcement has issued a show cause notice to one of India’s leading realty developers Emaar MGF to the tune of Rs 8600 crore for violating FDI rules under the Foreign Exchange and Management Act (FEMA) laws.
“The amount is just on the violation. Along with penalties, it may go over Rs 25,000 crore,” ED sources told HT.
It is for the first time that ED has issued notice to a real estate major, the official added. The significance was not lost on a day that the Union Cabinet cleared the Real Estate Regulatory bill paving the way for the unregulated realty market in India.
The violations relate to using FDI to buy farmland which is not allowed in India. Sources put Emaar MGF’s land bank at about 14,000 acres of which a substantial chunk was farmland.
ED said that its investigations revealed that foreign investments received by the company and its four subsidiaries from Dubai, Cyprus, Mauritius and other foreign countries under the FDI scheme of RBI were utilised to buy agricultural land through various methods “either directly or through other associated companies by diverting overseas funds to them”.
“This company and subsidiaries disclosed the use of FDI in construction development projects, but utilised the overseas funds in the purchase of agricultural land in India and thus have utilised the overseas funds in the business neither disclosed to RBI nor permitted in the FDI scheme of RBI,” an ED note said.
RBI’s scheme had provided the facility to Indian companies under automatic route to receive funds from abroad for a number of business activities including the construction development projects.
Emaar MGF Land Ltd is a joint venture between Emaar group of Dubai and MGF Development Ltd of India. Having started operations in India in 2005, Emaar has presence in 14 countries, its website claims.
On being contacted, a company spokesperson declining comment said: “We have not received any communication from the government authorities.”