Reforms in FDI Policy in Constructions sector has increased the flow of investment

By Accommodation Times News Services

Image for FDIForeign direct investment (FDI) in construction sector in India is increasing on a good pace, Commerce and Industry minister Nirmala Sitharaman recently informed during a parliament session that, FDI has grew by 44 per cent to $63.16 billion during June 2014 to February 2016 period and all these investments were done in sectors like railway, medical devices, construction and defence.

Also, as per Reserve Bank of India’s (RBI) annual Report dated 22nd August 2015, stated that out of the total $24.5 billion investment received in 2014-15, $1.8 billion was invested in construction and real estate segments. The distribution by sectors for total FDI flows via the Secretariat for Industrial Assistance/Foreign Investment Promotion Board and RBI routes is given in RBI’s Annual Report.

“Due to the continuous reforms and initiatives being undertaken by the government, the FDI equity inflow has recorded a growth of 44 per cent in its 21 months tenure (June 2014 to February 2016),” Commerce and Industry minister Nirmala Sitharaman said.

She said that FDI has increased from $43.87 billion to $63.16 billion during June 2014 to February 2016 as compared to the preceding period of 21 months (September 2012 to May 2014).

She said to boost the entire investment environment and to bring in foreign investments in the country, the government has brought in FDI related reforms and liberalisation touching upon 15 major sectors of the economy by putting more and more FDI proposals under automatic route.

  • Reforms in FDI Policy on Constructions Development sector include:
    • Removal of conditions of area restriction and minimum capitalization to be brought in within the period of six months of the commencement of business.
    • Exit and repatriation of foreign investment is now permitted after a lock-in-period of three years. Transfer of stake from one non-resident to another non-resident, without repatriation of investment is also neither to be subjected to any lock-in period nor to any government approval.
    • Exit is permitted at any time if project or trunk infrastructure is completed before the lock-in period.
    • 100% FDI under automatic route is permitted in completed projects for operation and management of townships, malls/ shopping complexes and business centers.

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