The Union Cabinet on Wednesday approved abolition of the foreign investment regulator or the Foreign Investment Promotion Board.
Going forward, only 11 sectors will need prior approval for foreign investment and decisions to that effect will be taken by the respective ministries in consultation with Department of Industrial Policy and Promotion, Finance Minister Arun Jaitley told reporters at a press briefing. In some cases references may be made to the home ministry for permission, he added.
Over the last few years, 91-95 percent of FDI has been coming via the automatic route, reducing the need for FIPB, the finance minister said. Scrapping the 25-year old body will help ease of doing business, Jaitley added.
The FIPB, responsible for approving foreign investment proposals, was initially constituted under the the Prime Minister's Office in the wake of the economic liberalisation of the early 1990s.
In the Union Budget 2017-18, Finance Minister Arun Jaitley had proposed abolishing the inter-ministerial body, which comes under the Department of Economic Affairs.
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.Arun Jaitley, Finance Minister in Budget 2017-18 Speech
New Defence Policy Cleared
The government cleared the policy for strategic partnerships in defence which will encourage local manufacturing in defence.
The ministry of defence had recently cleared a new policy that looks to boost private participation in the sector.
The Defence Acquisition Policy has four strategic segments – single engine fighter aircraft, helicopters, submarines and armoured fight vehicles/main battle tanks. Each segment will have one strategic partner and one original equipment maker (OEM).
Fair Price For Sugarcane
The Cabinet also fixed the fair and remunerative price payable by sugar companies for 2017-18. Companies will have to pay Rs 255 per quintal for a basic recovery rate of 9.5 percent. Thereafter, for every 0.1 percent increase in the recovery rate, the FRP will be increased by Rs 2.68 per quintal.
The FRP is the minimum price that sugarcane farmers are legally guaranteed. However, state governments are free to fix their own state advised price (SAP) and millers can offer any price above the FRP.