Government of India
Ministry
of Commerce & Industry
Department
of Industrial Policy & Promotion
SIA
(FC Division)
PRESS NOTE NO. 3 (2002 SERIES)
Subject:
Guidelines for FDI in development of integrated township including housing and
building material
Government vide Press Note No. 4 (2001 series) permitted
FDI up to 100% for development of integrated townships, including housing, commercial
premises, hotels, resorts, city and regional level urban infrastructure facilities such as
roads and bridges, mass rapid transit systems and manufacture of building materials. Development of land and providing allied
infrastructure will form an integrated part of township’s development.
2.
FDI in the development of integrated townships will be subject to the following
guidelines:
i)
The foreign company
intending to invest, shall be registered as an Indian Company under Companies Act 1956 and
will henceforth be allowed to take up land assembly and its development as a part of
Integrated Township Development. All such
cases would be processed by FIPB on the recommendation of Ministry of Urban Development
& Poverty Alleviation and other concerned Ministries / Departments. Ministry of Urban Development & Poverty
Alleviation will develop an exclusive cell to deal with such cases.
ii)
The core business of the
company seeking to make investment, should be integrated township development with a
record of successful execution of such projects elsewhere.
iii)
The minimum area to be
developed by such a company should be 100 acres for which norms and standards are to be
followed as per local bylaws / rules. In the absence of such bylaws / rules, a minimum of
two thousand dwelling units for about ten thousand population will need to be developed by
the investor.
iv)
The investing Foreign
company should achieve clear milestones once their proposal has been approved.
a) The minimum capitalisation norm shall be US$
10 million for a wholly owned subsidiary and US$ 5 million for joint ventures with Indian
partner/s. The funds would have to be brought
in upfront.
b)
A minimum lock-in period
of three years from completion of minimum capitalisation shall apply before repatriation
of original investment is permitted.
c)
A minimum of 50% of the
integrated project development must be completed within a period of five years from the
date of possession of the first piece of land. However,
if the investor intends to exit earlier due to reasons beyond his control, it shall be
decided by FIPB on a case-to-case basis.
v)
Conditions regarding the
use of land for commercial purposes, development charges, external development charges and
other charges as laid down in Master Plan / Bylaws, preparation of layout and building
plan, development of internal and peripheral development, development of other
infrastructure facilities including the trunk services etc., will be the responsibility of
the investor as per planning norms and standards on similar lines as those applicable to
local investors. In the absence of such
standards and norms, every State Government may decide their own conditions for which the
Urban Development Plan Formulation and Implementation guidelines circulated by the
Ministry of Urban Development & Poverty Alleviation may serve as a guiding principle.
vi)
Land with assembled area
for peripheral services such as police stations, milk booths will be handed over free of
cost to the Government / local authority / agency as the case may be.
vii)
The Developer will
retain the lands for community services such as (i) schools (ii) shopping complex (iii)
community centres (iv) ration shop (v) hospital / dispensary. These services will be developed by developer
himself and shall be made operational before the houses are occupied.
viii)
The developer, after
properly developing playgrounds, park, will make it available to the local authorities
free of cost.
ix)
The developer will
ensure the norms and standards as applicable under local laws / rules.
x)
For companies investing
in Special Economic Zones, Foreign Investment Promotion Board may accord exemption to any
of the above mentioned conditions on a case-to-case basis.
This will, however, be an interim measure till guidelines are evolved in due course
in a need based manner.
(M.S. SRINIVASAN)
Joint Secretary to the Government of India
No. 5(6)/2000-FC I dated 4th
January 2002