The Government has exempted foreign direct investment (FDI) in buildings meant for education and old-age homes from the conditions prescribed for the construction sector.

It has also amended the policy to provide for companies raising external commercial borrowings to pledge their shares for securing their ECB.

The general conditions in the construction sector include a minimum area and built-up area requirement; a minimum capitalisation requirement; and a lock-in period. An official statement on Friday on the changes in the FDI policy said these conditions had constrained investment.

Educational institutions and old-age homes have their own special requirements that do not necessarily fit these conditions. The exemption is aimed at bringing up the educational infrastructure to global standards, the statement added.

“The physical infrastructure in old-age homes is also short of requirements. Hence, it has also been decided to exempt old-age homes,” it said.

The other significant change is the inclusion of ‘basic and applied research and development on bio-technology, pharmaceutical and life- sciences' as an ‘industrial activity' under industrial parks. Now, 100 per cent FDI under the automatic route is permitted in existing and new industrial parks.

The newly permitted ‘industrial activities' is to augment R&D infrastructure in these areas and also to expand the production facilities.

The changes also include the ‘liberalisation of conversion of imported capital goods/machinery and pre-operative/pre-incorporation expenses to equity instruments'. The amendment clarifies that the time limit for making applications for such conversions will be 180 days.

Further, payments for pre-operative/incorporation expenses can now be made directly by the foreign investor to the company or through a bank account, opened by the foreign investor, as provided under the FEMA regulations, it said.

The other changes include allowing 100 per cent FDI under the automatic route in ‘apiculture' (beekeeping) under controlled conditions. It has also formally notified the revised limit of 26 per cent for foreign investment in terrestrial broadcasting/FM radio.

Apiculture has the potential of large-scale income generation with some infusion of capital and technology. This liberalisation would bring in international best practices in the sector.

> arun.s@thehindu.co.in

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