Government Moves Draft Cabinet Note to Abolish FIPB
The new mechanism for FDI is likely to come into effect from April end.
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The finance ministry has moved a draft Cabinet note to abolish the inter-ministerial body for clearing foreign direct investment (FDI) in India, a senior official told BloombergQuint on the condition of anonymity. The new mechanism for FDI is likely to come into effect from April end, the official added.
The government will table the note to abolish the Foreign Investment Promotion Board (FIPB) in the Cabinet soon, after receiving suggestions from various ministries, said the official. The FIPB will be abolished within four weeks of Cabinet approval.
Finance Minister Arun Jaitley had proposed abolishing the FIPB in the Union Budget 2017-18.
“The Foreign Investment Promotion Board has successfully implemented e-filing and online processing of FDI applications. We have now reached a stage where FIPB can be phased out. We have therefore decided to abolish the FIPB in 2017-18. A roadmap for the same will be announced in the next few months,” he had said.
Under the new mechanism, the concerned ministry which receives the proposal will decide whether to accept or reject an investment proposal, the official said. Proposals of over Rs 5,000 crore will continue to be approved by the Cabinet Committee on Economic Affairs (CCEA).
An inter-ministerial body set up by the finance ministry was tasked to outline the roadmap for phasing out FIPB, and come up with an alternative framework. The committee has submitted its recommendations in the form of a draft cabinet note which has been circulated among different ministries for suggestions, the official said.
The inter-ministerial body is headed by Saurabh Garg, joint secretary of investments and currency division of the finance ministry.
The FIPB was initially constituted under the Prime Minister's Office in the wake of economic liberalisation in the early 1990s.
Till the new mechanism is adopted, the FIPB will continue to review FDI proposals. The body will meet next on March 29 to review the proposal of Vodafone India’s subsidiary– Vodafone Mobile Services – among others.