25 Year Old Foreign Investment Promotion Board Abolished; FDI Will Now Be More Seamless
Foreign Investment Promotion Board or FIPB is a 25 year old Govt. inter-ministerial body which was established in 1990 under the Prime Minister’s Office for managing foreign investments into India.
It was part of the liberalisation policy of then Govt.
Over the years, it has changed its structure and body: It was shifted under DIPP in 1996, and then moved under department of economic affairs in the finance ministry in 2003.
But now, Govt. has decided to abolish the board entirely, and replace it with a new process and protocol for managing foreign direct investments.
In fact, as per Govt.’s statements, out o $60.1 billion received as FDI last year, over 90-95% of the FDI is coming in via automatic rouftes, and the relevance and requirement for an outdated agency like Foreign Investment Promotion Board is now reduced.
Finance Minister Arun Jaitley had announced during the Union Budget 2017 that FIPB would be made even less relevant.
Now, this has been made official.
The purpose of phasing out FIPB is to make India a more favourable and attractive destination for foreign investments, and to implement ‘Maximum Governance and Minimum Government’ principle overall.
There are only few sectors where Govt. security clearance is required for FDI, where a FIPB-type mechanism would work.
The Minister said, “Only in 11 sectors, there is need for prior government approval which will now be dealt by the department concerned..”
Besides, @MakeInIndia, which is the official handle of Make in India scheme, tweeted: All FDI from Pakistan and Bangladesh and FDI proposals requiring approval in Private Security Agencies and manufacture of small arms to be approved by Ministry of Home Affairs,”
How Will FDI Work Now?
As per the statements issued by Govt. in this regard, all future concerns related with FDI Policy and Foreign Exchange Management Act would be handled by the respective MInistries and Department of Industrial Policy & Promotion (or the DIPP, in the) Ministry of Commerce would be directly overviewing the process.
Infact, DIPP will soon come out with a details SoP (Standard of Procedure) for enacting FDI implementation policy, for various industries and niches.
As per other reports, economic affairs secretary and annual review by the finance minister would take place for every major FDI proposal ;and a special Cabinet Committee on Economic Affairs will clear FDI proposals more than Rs 5000 crore.
We will keep you updated as we receive more information in this matter.