FM Arun Jaitley had announced in the budget for 2017-18 the government‘s intent to replace FIPB with a new system to ease FDI rules and remove procedural delays
The government will finalise a Cabinet note in the next two to three weeks defining a new mechanism to approve overseas investment applications and hasten fund flows, bringing down the curtains on the two decade-old Foreign Investment Promotion Board (FIPB).
FIPB, an inter-ministerial body, is the current nodal agency responsible for processing of foreign direct investment (FDI) proposals.
Finance Minister Arun Jaitley had announced in the Budget for 2017-18 the government’s intent to abolish the FIPB and replace it with a new system as part of the government’s broader strategy to ease FDI rules, remove procedural delays and the turn India into a global investment hotspot.
"A Cabinet note will be finalised in two-three weeks and a mechanism for approving investment proposal will be created," a source said on the condition of anonymity.
The meeting held on February 21, in all probability, was the last FIPB meeting for clearing foreign investment proposal, a source told Moneycontrol.
However, pending investment proposals would definitely be taken care of and processed, the source said, adding that the new procedure would look into them.
FIPB, comprising officials from department of revenue, economic affairs and department of industrial policy and promotion (DIPP), among others is currently consulting concerned sectorial ministries, which attract maximum FDI.
The board is also taking view from industry, with some law firms voicing concerns about doing away with FIPB.
"Some law firms have said that FIPB had certain expertise (of examining and approving investment proposal) and abolition may not be the best decision," the source said.
The government would firm up a policy after hearing out every concern of the industry, the source said.
The Centre is trying to promote more foreign inflows in the country and winding up of FIPB would further improve "ease of doing business".
Last month, commerce and industry minister Nirmala Sitharaman had said that eliminating FIPB will further improve ease of doing business and the respective ministry regulators are sufficient to take care of investment proposals.
Currently, more than 90 percent of the total FDI inflows pour in through the automatic route, while FIPB or Cabinet approval is required in others.
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First Published on Mar 7, 2017 10:37 am