The Cabinet has approved a proposal to scrap the Foreign Investment Promotion Board (FIPB), with the Centre indicating that the 25-year-old institution has outlived its use.
The government will soon come out with a notification that will lay down which ministry or department is responsible for clearing proposals in the 11 sectors where approvals for FDI are not through the automatic route, Finance Minister Arun Jaitley said in a briefing following the Cabinet meeting on Wednesday.
“In the last three years, 91-95 per cent of FDI came into the country through the automatic route. The balance 5-9 per cent that needed approval are restricted to just 11 sectors and they will continue to need approval,” he added. The 11 sectors include defence, retail and telecom. In sectors where there are concerns related to security, FDI proposals will also need Home Ministry approval, Jaitley said.
In this year’s Budget, the Finance Minister had announced that the government had decided to do away with the FIPB and the details would be finalised shortly.
FDI proposals over ₹5,000 crore will continue to require final approval from the Cabinet.
“With FIPB getting abolished, it is expected that foreign investment proposals will be considered by the concerned ministry in consultation with the DIPP (Department of Industrial Policy & Promotion),” said Radhika Jain, Director, Grant Thornton Advisory.
“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.”