Norms for FDI in construction

NEW DELHI: Foreign investors entering construction business in India will have to develop at least 50% of their projects within five years after obtaining clearance.

According to the new foreign direct investment (FDI) guidelines notified here on Friday for construction industry, minimum capitalisation of $10 million for wholly-owned subsidiaries and $5 million for joint venture with Indian partner is compulsory.

Foreign investors would not be able to repatriate original investment before a period of three years from completion of minimum capitalisation. However, they may be able to exit earlier with the prior permission of the Foreign Investment Promotion Board (FIPB).

As per the guidelines, FDI upto 100% under the automatic route includes townships, housing, built-up infrastructure and construction development projects.

Housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure also included in the list where FDI has been put on automatic route but it would not be restricted to these areas only.

In case of serviced housing plots, a minimum area of 10 hectares has been stipulated through the new guidelines. For construction-development projects, a minimum built-up area of 50,000 sq metre is required.

The new norms emphasise that investors would not be allowed to sell undeveloped plots without developing roads, water supply, street lighting, drainage, sewerage and other conveniences as applicable under prescribed regulations.

It will be necessary for the investor to provide infrastructure and obtain completion certificate from the local service agency concerned before he is allowed to dispose of serviced housing plots.

Such projects will have to conform to norms and standards, including land use requirements and provision of community amenities and common facilities as laid down in the applicable building control regulations, bye-laws, rules and other regulations of state governments and local bodies.

Investors will have to obtain all necessary approvals, including those of building layout plans, developing internal and peripheral areas and other infrastructure facilities, payment of development and external development and other charges.