Cabinet approves phasing out Foreign Investment Promotion Board
The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval to the phasing out of Foreign Investment Promotion Board (FIPB). The proposal entails abolishing the FIPB and allowing administrative Ministries/Departments to process applications for FDI requiring government approval.
Henceforth, the work relating to processing of applications for FDI and approval of the Government thereon under the extant FDI Policy and FEMA, shall now be handled by the concerned Ministries/Departments in consultation with the Department of Industrial Policy & Promotion(DIPP), Ministry of Commerce, which will also issue the Standard Operating Procedure (SOP) for processing of applications and decision of the Government under the extant FDI policy.
In addition, Foreign Investors will find India 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.
Radhika Jain, Director, Grant Thornton Advisory Private Limited on the Cabinet’s nod on the abolition of FIPB said that “With FIPB getting abolished, it is expected that foreign investment proposals will be considered by the concerned ministry in consultation with the DIPP. Towards this end it is hoped that DIPP comes out with clear guidelines and operating procedures defining the parameters that should be considered for clearance of proposals. This would is required to ensure that there is alignment in the approach of different ministries.”
The proposal for abolition of FIPB was approved by the Cabinet in its meeting on 24-05-2017. Presently, applications are considered by FIPB in Department of Economic Affairs (DEA), Ministry of Finance comprising of various Secretaries of Government of India for making recommendation on FDI applications. After the Cabinet decision, it would be handled independently by Administrative Ministries as per Sector.