FIPB scrapped by Union Cabinet to boost FDI inflow
With Union Cabinet scrapping Foreign Investment Promotion Board, or FIPB, FDI proposals will now be scrutinized and cleared by government departments concerned
New Delhi: In a move to reduce red tape in government and facilitate ease of doing business, the Narendra Modi government on Wednesday abolished the Foreign Investment Promotion Board (FIPB) that vets foreign investment proposals.
While foreign investments by non-resident Indians and FDI in retail and export oriented units will be approved by DIPP, FDI in banks will be approved by the Department of Financial Services. DIPP or Department of Economic Affairs will undertake a quarterly review of FDI proposals, the @makeinindia handle said.
Devraj Singh, an executive director at EY India, said the move would help ease the processing of foreign investment approvals. “It will be interesting to see how quickly the line ministries get well versed with the nuances of the FDI policy and maintain consistency/ transparency and continuity, which is paramount for the foreign investors," he added.
Akash Gupt, partner and leader at PwC India, said the new approval mechanism should be made simpler and time-bound to help speed up processes. “Ideally, more and more sectors should be put under automatic route and the FDI compliance should be monitored by respective government departments as part of licence compliance processes," he added.
FDI into India rose 9% to a record $43.5 billion in 2016-17, at a time when global FDI inflows are falling. In the January-March quarter, FDI equity inflows, however, fell 28% to $7.6 billion, data released by the DIPP on Friday showed.
In his budget for 2017-18, Jaitley said since FIPB has successfully implemented e-filing and online processing of FDI applications, the government had now reached a stage where FIPB could be phased out. “We have therefore decided to abolish FIPB in 2017-18," he said.
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