Press Note 2 of 2005 had permitted foreign direct investment in certain qualified real estate development projects provided the investors complied with prescribed minimum capitalization norms.

These norms required investors to bring in at least USD 10 million for wholly owned subsidiaries and USD 5 million for joint ventures with Indian partners, within six months of commencement of business of the project company. The norms also prohibited the investor's exit or repatriation of the "original investment" before the completion of three years from the completion of minimum capitalization.

Many law firms had taken the view that the term "original investment" referred only to the minimum amount prescribed for capitalization of the project company i.e. USD 10 or 5 million as applicable. Subsequently on July 15 2009, certain government officials at the Department of Industrial Policy and Promotion (DIPP), using their website's bulletin board service) clarified that the term "original investment" meant the entire investment brought in as FDI as opposed to the minimum capitalization amount only.

However as late as mid-September 2010, a joint report by FICCI and Ernst & Young stated that there continued to be a lack of clarity on what constituted the original investment. Apparently in response to this report, the latest consolidated circular released by the DIPP has put matters to rest by clarifying that the entire investment amount is subject to a three year lock-in. Furthermore, this three year period is to be calculated as commencing from the date of receipt of each instalment/tranche of FDI or from the date of completion of minimum capitalization, whichever falls later.