New Delhi: The Union Cabinet on Wednesday abolished the Foreign Investment Promotion Board (FIPB) that was set up in the early 1990s to deal with foreign direct investments (FDI) as a follow-up to the economic liberation.
Finance and Defence Minister Arun Jaitley said at a media briefing that the board had become more or less redundant as 91 to 95 per cent of foreign investments in the last three years came through automatic route and so the few sectors, 11 to be exact, left for prior approval will be now dealt by the ministry or department concerned.
The mechanism of the board for just 5% to 9% FDI proposals was felt unnecessary and rather time consuming.
In some cases involving the security concerns, an additional approval of the home ministry will be required. Foreign investment proposals exceeding Rs 3,000 crore will continue to go to the Cabinet Committee on Economic Affairs headed by the Prime Minister while proposals below this used to be approved by the finance minister on the board’s recommendation, Jaitley said.
Finance Minister Arun Jaitley in his Budget speech on February 1 had announced the scrapping of the inter-ministerial body, which comes under the ministry’s Department of Economic Affairs.
The decision to abolish FIPB was taken by the Cabinet, chaired by Prime Minister Narendra Modi.
There could also be a provision for quarterly review of pending proposals by the economic affairs secretary and annual review by the finance minister. Inflow of foreign direct investment into India increased by 9 per cent to $43.48 billion in 2016-17.
Asked about how long the process of abolition would take, Jaitley said this would be done expeditiously. Cases pending for approval with the FIPB would now be taken up by the respective ministries, the Finance Minister clarified.
