The government on Wednesday approved the joint venture between Dubai-based Emaar Properties and Delhi's MGF group for the development of integrated township projects.
The venture, a $833 million project, is the largest foreign direct investment proposal in real estate in India so far. It will focus on building residential apartments, commercial properties and infrastructure like roads and mass rapid transportation systems.
The Cabinet Committee on Economic Affairs, which met today, cleared the Foreign Investment Promotion Board's recommendation to allow the joint venture between Emaar Properties of Dubai with MGF Development and Sarin Estate Pvt Ltd, both belonging to the Delhi-based MGF group.
"Around 60 per cent of the capital will be provided by the foreign partner, while the Indian partner will put in 40 per cent. Around $500 million will come into the country as foreign direct investment as a result of this decision," Finance Minister P Chidambaram told reporters after the meeting.
Emaar plans to make all its future real estate investments in India through the joint venture with the MGF group, which has built, and manages, shopping malls like Metropolitan and Plaza in Delhi.
It will be responsible for the management of the joint venture company and will appoint the key executives.
The MGF group has interests in real estate development, automobile retailing and finance. The turnover of its automobile business is estimated at Rs 500 crore (Rs 5 billion).
Listed on the Dubai Financial Market, Emaar has a market capitalisation of $9.5 billion and reported a profit of around $460 million for the year ended December 31, 2004.
Emaar, which owns Dubai Bank, has been associated with large projects like the Burj Dubai Tower and the Dubai Mall, the world's largest shopping and entertainment complex.
It already has a joint venture with the Andhra Pradesh government, called Andhra Pradesh Industrial Infrastructure Corporation.
