Cabinet abolishes FIPB – The Tribune
Tribune News Service
New Delhi, May 24
In a step directed at enhancing the ease of doing business, the Union Cabinet today gave its approval to the phasing out of the 25-year-old institution of the Foreign Investment Promotion Board (FIPB). The Cabinet approved a proposal which entails abolishing the FIPB and allowing administrative Ministries and Departments to process applications for FDI requiring government approval.
Finance Minister Arun Jaitley said proposals in sensitive sectors will require the Home Ministry’s approval. On the proposals pending with the FIPB, he said, they will go back to the ministries concerned. He said around 91-95% of FDI proposals are already under the automatic route. There could also be a provision for quarterly review of pending proposals by the Economic Affairs Secretary and annual review by the Finance Minister.
The FDI proposals above Rs 5,000 crore would continue to be cleared by the Cabinet Committee on Economic Affairs.
According to an official statement, from now on, the work relating to processing of applications for FDI and approval of the government under the FDI Policy and FEMA, will now be handled by the concerned Ministries in consultation with the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce, which will also issue the Standard Operating Procedure (SOP) for processing of applications and decision of the government under the FDI policy. The government said that with this decision, foreign investors will find India more attractive destination and this will result in more inflow of FDI. The decision to abolish the FIPB was announced by Finance Minister in his Budget speech this year. Currently, 90% of the FDI proposals are under the automatic route.
Rejection of FDI proposals has also been made difficult and concurrence of DIPP will be mandatory.
Industry body CII welcomed the Cabinet decision to abolish the FIPB. It said “The momentous initiative, which is a follow-up of the measure announced in the Union Budget, would streamline the process of FDI approvals and thereby boost FDI flows into the country, adding to growth and employment.”
Other major decisions
- The Cabinet on Wednesday approved the closure of ITDC’s Janpath hotel in Delhi and the property will now be used for setting up government offices
- The Cabinet also approved a public procurement policy to give preference to domestically manufactured goods with a view to promote ‘Make in India’ initiative
- The government also approved the Noida-Greater Noida Metro Rail project to be built at a cost of over Rs 5,500 crore
- To boost inland water transport, the government also approved allocation of 2.5% of the Central Road Fund for National Waterways that would result in about Rs 2,000 crore proceeds per annum for their development