Look For Cooperation On Construction Projects (India)

Construction freed for FDI in India. The Indian Cabinet cleared a proposal to allow 100 per cent foreign direct investment(FDI) through the automatic route in construction.

It has also decided to allow 100 per cent FDI through the same route in the construction of townships, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, and city and regional level infrastructure.

However, in order to avoid speculation in real estate by foreign investors, the sale of undeveloped land has been prohibited. The new guidelines are expected to boost construction of all types.

Under the new norms, the minimum area to be developed for serviced housing plots will be 10 hectares(or 25 acres), while for construction development projects, it will be a built-up area of 50,000 sq metres. In case of a combination of projects, meeting either of the two conditions will suffice.

As per the present guidelines, the minimum area to be developed is 100 acres and a minimum of 2,000 dwelling units.

FDI projects shall conform to the norms and standards, including land-use requirements and provisions of community amenities and common facilities as laid down in the applicable building control regulations, bye-laws, rules and other regulations of state governments, municipalities or concerned local bodies, the release said.

Investment will also be subject to a minimum capitalisation of $ 10 million for wholly owned subsidiaries and $ 5 million for joint ventures with Indian partners. The funds will also have to be brought in within six months of commencement of business.

The norms stipulate that the original investment cannot be repatriated within three years of the completion of the minimum capitalisation. However, the investor may be permitted to exit earlier than that with prior approval of the government through FIPB. We can arrange for joint ventures with potential companies/developers in major cities of India.

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