India eases FDI rules for construction sector

By Admin
India has eased foreign direct investment rules for the construction sector in an effort to attract more money into the country to build new hotels, hou...

India has eased foreign direct investment rules for the construction sector in an effort to attract more money into the country to build new hotels, housing and townships, the government said on Wednesday.

Under the new rules, foreign investment is now allowed in projects with a minimum built area of 20,000 square meters, down from a previous 50,000 threshold. The minimum capital investment by foreign companies has also been halved to $5 million.

Prime Minister Narendra Modi has a vision to create 100 new “smart cities” by 2020, and to make that a reality foreign capital is likely to play a part.

India's construction industry, worth an estimated $126 billion, attracted 11 percent of all foreign investment into the country between 2000 and 2013, the second highest of any sector, but the pace of investment has slowed in recent years.

India received $1.2 billion of foreign direct investment in the year to March 31 compared with $1.3 billion the previous year. Between April and August this year, foreign investment totaled $446 million.

Vishwas Udgirkar, senior director at Deloitte, said the rules would appeal to investors with less cash or those that wanted to take on less risk, but that many crucial decisions for investors were out of the hands of the central government.

“This sends a signal to investors. But many other things need to be done simultaneously, at the state level, at the city level,” he said.

Decisions to open up land for development and the granting of various approvals typically lie with individual states and municipalities in India.

Previously, India allowed 100 percent foreign direct investment in real estate development but with strict conditions, including a lock-in period of three years during which the investment cannot be repatriated.

Share

Featured Articles

Open ECX is transforming construction with digital solutions

Open ECX offers innovative, cloud-based e-trading solutions for the construction sector and its associated supply chain

Bechtel and CWP Global spot Africa green hydrogen potential

Partnership involving CWP Global and Bechtel to provide planning solutions for integrated configurations involving green hydrogen facilities

'Better with Bellway' sustainability strategy launched

Bellway's new sustainability strategy coincides with half-year results in which the UK homebuilder's operating profit rose 11.6% to £332.2mn

Construction of utility scale solar farms to accelerate

Construction Projects

China's longest reconstructed bridge to open early April

Construction Projects

Construction firms must focus on water neutrality

EPC