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Cabinet gives nod to phasing out of Foreign Investment Promotion Board
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Friday, 26 May, 2017, 08 : 00 AM [IST]
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Our Bureau, New Delhi
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The Cabinet, chaired by prime minister Narendra Modi, has given its approval to the phasing out of the Foreign Investment Promotion Board (FIPB). In a statement, the government said that the proposal entailed abolishing it and allowing administrative ministries or departments to process applications for foreign direct investment (FDI) requiring government approval.
It added, “Henceforth, the work relating to processing of applications for FDI and the approval of the government thereon, under the extant FDI policy and the Foreign Exchange Management Act (FEMA), 1999, shall now be handled by the concerned ministries/departments in consultation with the commerce ministry’s Department of Industrial Policy and Promotion (DIPP), which will also issue the standard operating procedure (SOP) for the processing of applications and decisions of the government under the extant FDI policy.”
“In addition, foreign investors will find India a more attractive destination and this will result in more inflow of FDI. The move will provide ease of doing business and will help in promoting the principle of maximum governance and minimum government,” the statement said.
The proposal for abolition of FIPB was approved by the Cabinet in its recent meeting. Presently, applications are considered by FIPB in the finance ministry’s Department of Economic Affairs (DEA), comprising of various secretaries of the government of India for making recommendations on FDI applications. After the Cabinet decision, it would be handled independently by the administrative ministries as per the sector.
The Confederation of Indian Industries (CII) welcomed the Cabinet’s decision to abolish FIPB.
In a statement, Chandrajit Banerjee, director general, CII, said, “The bold step of dismantling of FIPB with only 11 sectors now needing approvals, along with decisions such as a single window to clear FDI proposals, reflects the government’s commitment to reforms and reassures investors that ease of doing business remains a high priority.”
The initiative would streamline the process of FDI approvals and thereby boost FDI flows into the country, adding to growth and employment.
Banerjee stated, “Already the government has among the most liberal FDI regimes in the world. This has greatly improved the investment climate.”
“As a result, for the last three years, FDI has been on the ascendant and is setting new records,” he added.
“Today’s reform would take FDI inflows to greater heights and reinforce the attractiveness of India as a viable business destination,” Banerjee said.
Harsimrat Kaur Badal, minister for food processing industries, also welcomed the move, stating that it would allow faster approvals of the FDIs and would create an environment of ease of doing business.
The ministry is already in preparation of creating a facilitation desk for such proposals of investments.
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