Blog Details

Government clarifies FDI rules in construction sector

2015-03-25 Posted By:Infra Bazaar

The Department of Industrial Policy and Promotion (DIPP) today clarified the FDI rules in the construction sector, particularly on capitalization and exit clauses, to steer clear of uncertainty in FDI rules in the construction sector.

In a note, the department said, the minimum capitalization norms are not company specific, but project specific. The foreign companies which are wiling into invest in the Indian construction sector needs to invest at least a minimum USD 5 million, within six months from the date of approval of the project.

DIPP also clarified that the government allows no new FDI in the project if it fails to attract the FDI (minimum of USD 5 million) in the first six months of the project. Once the project receives a foreign investment in the first six months, the project can get FDI for the span of next ten years or until the project is completed.

The department also clarified that the exit would be automatic if the project is completed. It also clarified that the investors can make an exit even before the completion of the project, if Foreign Investment Promotion Board (FIPB) permits it.

Even the transfer of the stake in the on-going projects from one non-resident investor to other non-resident investor requires permission from the FIPB.

It is known that government allows 100% FDI in the construction sector.