Foreign Investment Promotion Board might be scrapped! FDI to be free of all govt controls

The process of taking back government’s last remaining controls in the foreign direct investment (FDI) framework has begun, which would result in the Foreign Investment Promotion Board (FIPB) being taken down, as announced by finance minister Arun Jaitley in his February 1 budget.

The department of economic affairs (DEA) has passed a draft Cabinet note for inter-ministerial consultation regarding this matter, which also proposes the responsibility of all foreign investment in sectors that require prior approval will be given to the relevant administrative ministry, department or regulator.

Also read: Good news for investors! New and simpler FDI reforms are coming in defence, telecom and broadcasting

This would lead to faster approvals, eliminating the need for multiple clearances.

Also, licensing for insurance, defence manufacturing or broadcast etc. would be a one-time thing, not requiring separate screening for individual orders.

While DEA note prescribes a deadline for proposals to be received by the board and handheld before ministries take over, DIPP is in favour of handing over proposals immediately to ministries and departments.

Also read: FDI inflows have risen 53% over last two years, says Finance Minister

DIPP is responsible for the FDI policy while DEA houses the FIPB and also administers the Foreign Exchange Management Act along with RBI.

"We have now reached a stage where FIPB can be phased out," Jaitley had said in his budget speech. "We have therefore decided to abolish the FIPB in 2017-18."

Over the last two years, there have been several reforms in the FDI policy, liberalising it so that more and more investors can be attracted to the country.

(Image source: DreamGains)