New Delhi: The commerce ministry has clarified that fresh foreign direct investment (FDI) can be brought into a construction project only if the minimum capitalisation requirement of five-million dollar has been achieved within six months of approving the building plan.
“If such minimum capitalisation is achieved, FDI can be brought in till the period of 10 years or the completion of the project, whichever is earlier,” the ministry said in a clarification to the Press Note 10 of 2014 on FDI.
The ministry also said approval from the Foreign Investment Promotion Board (FIPB) was necessary for exiting a project before creation of trunk infrastructure such as roads, water supply and street lighting. If trunk infrastructure is created, automatic exit is allowed. Automatic exit is also allowed on project completion.
FIPB nod is also needed for transfer of stake in a project from one non-resident to another before the completion of the project or construction of trunk infrastructure, said the ministry. If unused land is part of the project and trunk infrastructure is not developed, foreign investors can exit with approval from FIPB. The government had last year relaxed the FDI guidelines for construction development sector and reduced the minimum capitalisation requirement from $10 million to $5 million.