DIPP gives clarity on construction FDI norms

DIPP on Friday gave clarification of foreign direct investment (FDI) norms on construction. The clarifications came on two counts; one on exit clause related norms and second on minimum capitalisation.On minimum capitalisation, Department of Industrial Policy and Promotion (DIPP) has said that no new foreign direct investment (FDI) will be allowed if the minimum cap of USD 5 million is not achieved within six months. After the minimum capitalisation norms are achieved then FDI can be brought in for a period of 10 years or to the period upto which the project is completed. It also said that minimum capitalisation would be project specific and not company specific. On exit clause there are several clarifications - Foreign Investment Promotion Board (FIPB) nod would be needed for exit of foreign partner if the project is on-going. However, if the project is complete then it can be on an automatic basis. However, on what constitutes as a completion of project also the DIPP has specified norms. It said that even if the trunk infrastructure development in a construction development project is complete then such projects will be regarded as complete and hence the foreign partner can exit. Moreover, there is also clarification on non-residents to non-residents transfer. According to DIPP if the project is on-going then the non-residence to non-resident transfers would need FIPB nod.