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| Edited By: |Source: DNA |Updated: May 25, 2017, 07:30 AM IST
In a move that is likely to see further liberalisation of foreign direct investment (FDI) regime, India has scrapped the 25-year-old Foreign Investment Promotion Board (FIPB). The Board, which was vetting FDI proposals ever since it was constituted under the Prime Minister's Office in the wake of economic liberalisation in the 1990s, was any way losing its clout as approvals for FDI in most sectors are now allowed through the automatic route. In his Budget speech, finance minister Arun Jaitley had announced the scrapping of the inter-ministerial body.
During its heydays, FIPB had earned a lot of bad name by inordinately delaying their decisions, thereby annoying several foreign investors. In 2016, the government had relaxed FDI norms in single-brand retail, civil aviation, airports, pharmaceuticals, animal husbandry and food products. This left 11 sectors including defence and retail trading, where FDI into India required government nod. In some sectors such as aviation, defence and pharma, industry players are demanding a further easing of rules.
The FIPB has now come to a dead end. Jaitley had said in his FY18 Budget speech that the FIPB had successfully implemented e-filing and online processing of FDI applications. Henceforth, 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. Hopefully, the industry does not have to visit the corridors of power anymore, thanks to the government easing the process of doing business. However, the government needs to put in place a suitable mechanism to deal with investments in sensitive sectors.
