This content is from: Local Insights


The central government has allowed 100% foreign direct investment (FDI) under the automatic route through Press Note 2 effective from March 3 2005, issued by the Ministry of Commerce & Industry Department of Industrial Policy and Promotion SIA (FC Division) in townships, housing, built-up infrastructure and construction development projects including housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure under the following conditions:

  • a minimum area of 10 hectares can be developed for serviced housing plots, a minimum of 50,000 square metres of built-up area is required for construction development projects, and either of the two conditions applies for a combination project;
  • there is minimum capitalization of $10 million for wholly owned subsidiaries and $5 million for joint ventures with Indian partners brought in within six months of commencement of the company's business;
  • original investment cannot be repatriated before three years after completion of the minimum capitalization, except with prior permission of the government through the Foreign Investment Promotion Board (FIPB);
  • at least 50% of the project must be developed within five years of obtaining statutory clearance;
  • investors are required to provide conveniences such as roads, water supply, street lighting, drainage and sewerage, and obtain completion certificates from the local service agency concerned before disposing off the plot;
  • the project must conform to regulations as to land use requirements, common amenities and facilities as laid down by the concerned state government /municipal/local body;
  • the investor must comply with all the regulations and obtain all the necessary approvals, including building/layout plans, developing internal and peripheral areas and other infrastructure facilities, payment for development, external development and other charges, as required by the concerned state government/municipal/local body;
  • compliance of the above provisions by the investors will be monitored by the concerned public body.

This move is expected to generate investment and employment in this labour-intensive sector. It will ensure a rapid increase and improvement in built-up infrastructure.

Shardul Thacker

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