Mumbai: Reserve Bank of India (RBI) on Thursday notified 100% foreign direct investment (FDI) under automatic route in the construction development sector. The new limit is effective 2 December 2014, RBI said in a notification on its website.

In Thursday’s notification, the central bank stated that it had amended the foreign exchange management (FEMA) regulations accordingly on 8 December, to reflect the new limit.

The new limit is subject to conditions such as a minimum area developed of 20,000 sq. metre. The company receiving the investment will have to bring in at least $5 million worth of FDI within six months from the commencement of the project. Subsequent tranches of FDI can be brought in over a period of 10 years from the commencement of the project or before the completion of project, whichever expires earlier, RBI had said on 8 December.

On 3 December 2014, the ministry of commerce and industry had said in a statement that it had approved raising the FDI limit in townships, housing, built-up infrastructure and construction-development projects, (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure) in order to catalyse investment in a vital infrastructural sector of the economy.

FDI up to 100% but with prior government approval already exists for development of integrated townships including housing, commercial premises, hotels, resorts, the government’s statement had said.