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Any equity contribution by a foreign investor must be in accordance with the current Foreign
Exchange Management Act 1999 and the FDI Policy issued by the DIPP (together, the FDI
Regulations).
Certain government projects like road projects are partially funded by incentives by
government schemes. For example, the National Highway Authority of India (NHAI) offers
an annuity to successful bidders (and bidding is on the annuity required from NHAI) and the
Solar Energy Corporation of India (SECI) for solar projects grants viability gap funding
(VGF) to project developers (although this VGF has not been successful in the solar industry
in India).
Operations and Maintenance contracts are a very common mechanism used in infrastructure
projects. Under this mechanism, the facility to be maintained is owned by the government.
The private party is given periodic contracts in order to maintain these facilities in proper
working condition. There are multiple ways in which this arrangement is carried out. For
instance, in one type of arrangement, the government could provide a fixed fee to a contractor
in exchange for maintaining the facilities. On the other hand, there are leasing contracts, in
which the government leases the facility out to a private party. Hence, the government
receives a fixed sum as revenue from the project. The private party is then given the right to
collect money from the general public when they use the facilities.