In a recent amendment (December 3, 2014) to the Foreign Direct Investment (“FDI”) Policy, 2014 issued by the Ministry of Commerce of Industry, 100 percent investment will be allowed through the automatic route to boost construction of townships, residential and commercial premises, roads, bridges, hotels, resorts, hospitals, educational institutions, recreational facilities, cities and regional level infrastructure. The Press Note issued made following amendments to the current policy:
- Reduction of minimum floor area requirement to:
- 20,000 sq. metres as against 50,000 sq. meter for construction-development projects,
- NIL in case of serviced plots as against 10 hectares.
- The investee company shall be required to bring in minimum FDI of US$ 5 Million within 6 months of commencement of business and rest in subsequent tranches in over a period of ten years.
- Minimum FDI reduced to US$ 5 million as against US$ 10 million for wholly owned subsidiaries and joint ventures. However, the conditions of minimum floor area and capital requirement will not apply to investee/joint venture companies which commit at least 30% of the total project cost for low affordable housing.
- There is no lock-in period for repatriation of investment and development of some part of project within a period 5 years.
- The foreign investor has an exit opportunity from the project but after the completion of trunk infrastructure like road, water supply, street lighting and drainage.
- The current amendment is not meant for real estate business, construction of farm houses and trading in transferable development rights (TDRs).
The aforementioned conditions of minimum floor area, capital requirement and exit on completion of project will not apply to Hotels & Tourist resorts, Hospital, Special Economic Zone (SEZs), Educational Institution, Old Age Homes and Investment by NRI.
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