END OF FOREIGN INVESTMENT PROMOTION BOARD (FIPB)

The Finance Minister during his budget presentation announced the government's plan to phase out Foreign Investment Promotion Board (FIPB).

Now, the government has announced that FIPB will be scrapped and henceforth all decisions on foreign direct investment in India will be taken by respective administrative ministries.

Way Forward

FDI proposals will be considered by the concerned ministry in consultation with the Department of Industrial Policy and Promotion (DIPP), which will soon come out with clear guidelines and operating procedures for clearance of proposals.

Timilines to be fixed for disposal of application for approval of FDI by competent authorities.

Rejection of FDI Proposal by the competent authorities will require concurrence of DIPP.

Quarterly review of FDI Proposals by DIPP is also envisaged.

Thoughts

Scrapping of FIPB is hailed as a decisive move which will further ease of doing business in India as it is expected that the competent authorities under different ministries/ departments would clear the FDI proposal without delay than the FIPB which consists of members from various ministries.

However, the effectiveness of this move would depend on the competency of the competent authorities.