Source: The Economic Times, June 08, 2017
NEW DELHI: The government will soon unveil a portal to replace the website of the Foreign Investment Promotion Board, an interministerial body that has been dismantled as part of the ease-of-doing-business drive. The Department of Industrial Policy and Promotion (DIPP) will be the administrative body to manage the portal that will provide guidance on foreign direct investment, a senior official said. The website’s focus will be more on facilitation than approvals.
The Cabinet recently approved scrapping of the FIPB that vetted FDI proposals, removing one layer of decision making that is expected to make the investment process quicker.
“This development recognises that India is now comfortable that its foreign investment norms are liberal and do not require an inter-ministerial forum for clearance (of proposals),” said Gokul Chaudhri, leader-direct tax at BMR & Associates, a tax, M&A and risk advisory firm.
FDI proposals, depending on the sector where they are intended to, will now be cleared by the respective ministries. Proposals that raise security concerns will go also to the home ministry for approval.
The FIPB has been operating under the Department of Economic Affairs, which will transfer all pending issues including litigations over FDI proposals to various ministries, an office memorandum from the finance ministry said. The DIPP, meanwhile, is finalising a checklist and timelines for ministries to refer to while clearing FDI proposals.
While a time limit of not more than 60 days has been set for ministries to decide upon applications, no proposal can be rejected without taking the DIPP on board. Also, no new conditions can be added beyond the existing rules as per the standard operating procedures being drafted by the DIPP. The standard procedures will be decided by the industry department in consultation with the administrative ministry of the sector where the investment is happening to ensure consistency of treatment and uniformity of approach, the memorandum said.
A quarterly review meeting will be held by the secretaries at the Department of Economic Affairs and DIPP to take stock of FDI applications. All pending applications will be transferred to the DIPP by the end of June 2017.
The finance minister had proposed abolition of the FIPB in the last Budget. The move is expected to bring more foreign investment to India by making the process easier. More than 90% of FDI is through the automatic route, where investments do not require prior approvals.