Pranav Constructions Limited says 10% FDI can use automatic route

Sep 19, 2026•3 min read

Pranav Constructions Ltd.

PRANAV-CONS

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Pranav Constructions Limited says India’s 2026 foreign direct investment, or FDI, change permits non-controlling investment of up to 10% beneficial ownership from land-border countries through the automatic route, subject to Department for Promotion of Industry and Internal Trade reporting. Investments above 10% or those conferring control still require prior government approval.

What changed in the 2026 FDI rules for land-border investors?

The 2026 change creates an automatic-route category for non-controlling investments with beneficial ownership of up to 10% from land-border countries. Pranav Constructions says Press Note No. 2 (2026 Series), issued on March 15, 2026, eased certain restrictions established under Press Note No. 3 (2020 Series). The stated change includes a definition of “beneficial owner” aligned with the Prevention of Money Laundering Act, 2002.

The policy change was operationalised through the Foreign Exchange Management (Non-Debt Instruments) (Amendment) Rules, 2026, notified on May 1, 2026. The automatic route permits investment without prior approval when prescribed conditions are met. For this category, Pranav Constructions says automatic-route eligibility remains subject to prescribed reporting to the Department for Promotion of Industry and Internal Trade, or DPIIT.

The threshold is based on beneficial ownership rather than only the identity of an immediate investor. Pranav Constructions does not say that all investments from land-border countries have become automatic. Instead, the disclosure draws a 10% beneficial-ownership line between non-controlling investments that may use the automatic route and investments that exceed the threshold or confer control.

When does Pranav Constructions say approval is still required?

Prior government approval remains necessary when beneficial ownership from land-border countries exceeds 10% or when an investment confers control. This is the principal limit on the newly described automatic route. A holding at or below 10% is not by itself sufficient if the investment is controlling, because the disclosure separately identifies control as an approval trigger.

The foreign-investment passage does not define control, so the disclosed test is not solely a shareholding calculation. The distinction is two-part: a non-controlling investment with up to 10% beneficial ownership may use the automatic route with DPIIT reporting, while either a higher beneficial-ownership level or control requires government clearance.

The wider framework continues to apply. Pranav Constructions states that the Industrial Policy, 1991 sets limits and conditions for foreign investment, while the Foreign Exchange Management Act, or FEMA, regulates the manner in which investment may be made. The Reserve Bank of India, or RBI, and the relevant ministries or departments are identified as authorities responsible for granting foreign-investment approvals.

How does the 10% automatic FDI route fit construction development?

Construction-development projects can receive up to 100% FDI through the automatic route, but the 10% beneficial-ownership rule adds a separate approval test for relevant land-border investors. Pranav Constructions describes construction development as including townships, residential and commercial premises, roads, bridges, hotels, resorts, hospitals, educational institutions, recreational facilities, and city or regional infrastructure.

That 100% sectoral permission is subject to project conditions. Each phase of a construction-development project is treated as a separate project. An investor may exit on project completion or after trunk infrastructure has been developed, with trunk infrastructure defined as roads, water supply, street lighting, drainage and sewerage.

A person resident outside India may exit and repatriate investment before project completion under the automatic route after a three-year lock-in period calculated separately for each tranche of foreign investment. A transfer between two persons resident outside India without repatriation is neither subject to that lock-in period nor government approval, according to Pranav Constructions. These construction-sector conditions do not replace the separate 10% beneficial-ownership and control tests for land-border investors.

Foreign investment is not permitted in an entity engaged, or proposing to engage, in real estate business, construction of farm houses and trading in transferable development rights. Pranav Constructions also says an Indian investee company may sell only developed plots, meaning plots with trunk infrastructure available. State governments, municipal bodies or local bodies approve development plans and monitor compliance with the stated conditions.

Who can participate in Pranav Constructions’ offer as a non-resident?

The offer is limited to foreign portfolio investors and eligible non-resident Indians under specified FEMA schedules, rather than being open to every type of non-resident investor. Foreign portfolio investors, or FPIs, may participate under Schedule II of the FEMA Non-Debt Instruments Rules, with an individual FPI holding below 10% of Pranav Constructions’ post-issue paid-up capital. The aggregate FPI limit is currently up to 100%, which the disclosure identifies as the sectoral limit.

Eligible non-resident Indians, or NRIs, may participate only on a non-repatriation basis under Schedule IV of the FEMA Non-Debt Instruments Rules. Pranav Constructions says foreign venture capital investors, or FVCIs, and multilateral and bilateral development financial institutions cannot participate in the offer. Overseas corporate bodies, or OCBS, also cannot participate under the existing Government of India policy.

A transfer of shares between an Indian resident and a non-resident generally does not need prior RBI approval if three conditions are met: the investee company’s activity is under the automatic route and the transfer does not trigger takeover regulations; non-resident ownership remains within the applicable sectoral limit; and pricing follows Securities and Exchange Board of India, or SEBI, and RBI guidelines. Those transfer conditions operate alongside, rather than instead of, the approval requirement for investments above 10% beneficial ownership or those conferring control.

Conclusion

Pranav Constructions describes a narrower easing than a general removal of restrictions: up to 10% beneficial ownership from land-border countries can use the automatic route only when the investment is non-controlling and prescribed DPIIT reporting is completed. The framework combines that ownership-and-control test with the construction-development sector’s 100% automatic-route ceiling and project-specific conditions.

The next point to watch is compliance with the May 1, 2026 FEMA Non-Debt Instruments amendment and the prescribed DPIIT reporting process. Pranav Constructions also says laws and regulations may change after the red herring prospectus date, while the DPIIT FDI Policy effective from October 15, 2020 remains valid until DPIIT issues an updated circular.

Frequently Asked Questions

Pranav Constructions says non-controlling investment with beneficial ownership of up to 10% from land-border countries is permitted through the automatic route. The route remains subject to prescribed reporting to the Department for Promotion of Industry and Internal Trade. The change was operationalised on May 1, 2026.

Yes. Pranav Constructions says prior government approval is required where beneficial ownership from land-border countries exceeds 10%. Approval is also required where an investment confers control, including where the holding is not described as exceeding the threshold.

Pranav Constructions says up to 100% FDI is permitted under the automatic route for construction-development projects, subject to prescribed conditions. These include treating each project phase separately and complying with local building, land-use and infrastructure requirements. The 10% beneficial-ownership and control conditions remain separately relevant for land-border investors.

A non-resident may exit and repatriate foreign investment before completion of a construction-development project after a three-year lock-in for each investment tranche. The lock-in is calculated separately for every tranche of foreign investment. Transfers between two non-residents without repatriation are not subject to that lock-in or government approval, according to Pranav Constructions.

Pranav Constructions permits foreign portfolio investors under Schedule II of the FEMA Non-Debt Instruments Rules and eligible NRIs on a non-repatriation basis under Schedule IV. An individual FPI must remain below 10% of Pranav Constructions’ post-issue paid-up capital, while the aggregate FPI limit is up to 100%. FVCIs, multilateral and bilateral development financial institutions, and OCBS cannot participate in the offer.