The Indian government accused Dubai-backed real estate developer Emaar MGF Land Ltd on Tuesday of violating foreign exchange rules with investments worth 86 billion rupees ($1.51 billion) 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 PJSC 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.