Union Cabinet approves abolition of Foreign Investment Promotion Board

May 25, 2017 12:00 IST

The Union Cabinet, chaired by the Prime Minister Narendra Modi, on 24 May 2017 approved the proposal to phase out the Foreign Investment Promotion Board (FIPB).

The proposal approved entails abolishing the FIPB and allowing administrative Ministries and Departments to process applications for Foreign direct investment (FDI) requiring government approval.

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Hereafter, the work related to the processing of applications for FDI and approval of the Government thereon under the FDI Policy and FEMA, shall now be handled by the concerned Ministries in consultation with the Department of Industrial Policy & Promotion(DIPP), Ministry of Commerce.

DIPP will also issue the Standard Operating Procedure (SOP) for processing of applications and decision of the Government under the extant FDI policy.

Presently, applications are considered by FIPB in Department of Economic Affairs (DEA) for making recommendation on FDI applications. But after this decision of Union Cabinet, the applications would now be handled independently by Administrative Ministries as per Sector.

Detailed New Mechanism

 Different sectors, that require approval, would be dealt directly by the concerned ministries.

 The proposals related to security will require the approval of Home Ministry.

 Those proposals which are presently pending before the FIPB will be sent back to the concerned ministries.

 The FDI proposals above Rs 5000 crore will continue to come under the purview of the Cabinet Committee on Economic Affairs (CCEA).

Comment
The decision of the Union Cabinet to phase out FIPB may result in more inflow of FDI in the country as Foreign Investors may find India more attractive destination for FDI.

The move is also expected to provide ease of doing business and will help in promoting the principle of Maximum Governance and Minimum Government.

 

 

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Read more Current Affairs on: abolition of FIPB , Foreign Investment Promotion Board , FDI

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