The
Union Cabinet chaired by the Prime Minister Shri Narendra Modi has
given its approval to the phasing out of Foreign Investment Promotion
Board (FIPB).
The
proposal entails abolishing the FIPB and allowing administrative
Ministries/Departments to process applications for FDI requiring
government approval.
Henceforth,
the work relating to processing of applications for FDI and approval of
the Government thereon under the extant FDI Policy and FEMA, shall now
be handled by the concerned Ministries/Departments in consultation with
the Department of Industrial Policy & 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
extant FDI policy.
In
addition, Foreign Investors will find India more attractive destination
and this will result in more inflow of FDI. The move will provide ease
of doing business and will help in promoting the principle of Maximum
Governance and Minimum Government.
Currently
around 91-95% of FDI inflow happens through the automatic route, adding
that there are only 11 sectors (including defence and retail) needing
government approval.
The FIPB was initially set up under the Prime Minister's Office following the economic liberalization in the early 1990s.
It shifted under the DIPP in 1996, and then in 2003 to the department of economic affairs in the finance ministry.
