Source Business
Line
Cabinet relaxes norms for FDI
in construction
OUR BUREAU
eases minimum area
rule and minimum capital requirement
NEW DELHI, OCTOBER 29:
The Cabinet has
relaxed norms for foreign direct investment (FDI) in construction development
to make the sector more attractive for overseas investors.
The minimum built-up
area requirement for FDI in construction projects has been reduced from
50,000 sq metres to 20,000 sq metres, according to an official release.
The Government has
also halved the minimum capital requirement for such projects from $10
million to $5 million.
Projects that commit
at least 30 per cent of the total project cost toward low-cost affordable
housing will be exempted from the minimum built-up area and capitalisation
requirements.
Land use norms
However, there has been no relaxation in land-use norms.
The previous UPA
Government was examining the option of allowing Indian companies with foreign
investments to buy agricultural land with a promise to change it into
non-agriculture use later.
Last month, the
BJP-led Government relaxed FDI norms for the railways sector. “The
announcement has come in the nick of time. The construction sector’s share in
total FDI has slipped from over 20 per cent in 2009-10 to about 3 per cent
this year, as developers reel under high levels of debt,” said Anuj Puri,
Chairman & Country Head, JLL India.
The easier rules will
help speed up completion of projects, which are being delayed by a squeeze on
funds due to elevated debt levels, he added.
In the case of
development of serviced plots, there is no condition of minimum land area.
The existing FDI
policy allows 100 per cent foreign direct investment in the construction
sector subject to minimum built-up area and minimum capitalisation
requirements.
Exit option
According to the new rules, an investor will be permitted to exit on completion of the project or three years after the date of final investment, subject to development of trunk infrastructure.
The Government may
permit repatriation of foreign investment or transfer of stake by one
non-resident investor to another non-resident investor before the completion
of the project.
These proposals will
be considered by the Foreign Investment Promotion Board on a case by case
basis.
(This
article was published on October 29, 2014)
|
Wednesday, October 29, 2014
Cabinet relaxes norms for FDI in construction source Business Line
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