Government on Friday said foreign companies investing in the construction sector will have to bring in a minimum of $5 million within six months of the date of approval of the building plan.
Clarifying on the issues raised by investors on 2014 Press Note on Construction sector, the government said that exit from the incomplete project will be permitted after approval of the Foreign Investment Promotion Board (FIPB).
Automatic exit, it said, would be allowed after the completion of the project.
"FDI policy mandates exit on the completion of the project or completion of trunk infrastructure.
If the unused land is part of the project and trunk infrastructure has not been developed, then exit can take place with prior approval of FIPB," the clarification said.
The government in 2014 relaxed the guidelines for Foreign Direct Investment (FDI) in Construction development sector and reduced the minimum capitalisation requirement from $ 10 million to 5 million. It has been clarified that minimum capitalisation condition is project specific, not company specific.
The government further said that no new FDI will be allowed in the project if the minimum capitalisation of $5 million has not been achieved within six months of commencement of the project.
"If such minimum capitalisation was achieved, FDI can be brought in till the period of 10 years or the completion of the project, whichever is earlier," it said.
The six month time period for the purpose of FDI would commence from the date of approval of the "building plan/lay out plan by the relevant statutory authority."
Further approvals would be just addendum or modification to the first approval, it clarified.
The transfer of stake from one non-resident to another non-resident before completion of the project or before completion of trunk infrastructure would require FIPB nod, it added.
Trunk infrastructure includes road, water supply, street lighting, drainage and sewerage.
