Ministries get 60 days to decide on FDI plans

With the abolition of the Foreign Investment and Promotion Board (FIPB), the ministries tasked with clearing foreign direct investment proposals in the 12 sectors that need government nod would have to take a decision within 60 days, the finance ministry said.

The Cabinet had last month approved the abolition of FIPB, which was the authority clearing foreign direct investment (FDI) proposals for 25 years.

In a memorandum on Tuesday, the finance ministry said the Department of Industrial Policy and Promotion, in consultation with the administrative ministries, would come out with standard operating procedures to process FDI proposals and ensure “consistency of treatment and uniformity of approach”. A panel led by the secretaries of the department of economic affairs (DEA) and the department of industrial policy and promotion (DIPP) would conduct a quarterly review on the pending proposals.

"Ordinary FDI applications, including those related to non-resident Indian (NRI)/export-oriented unit (EOU), food processing, single-brand retail trading and multibrand retail trading proposals, should be decided in 60 days," the memorandum said. "FDI proposals by NRIs/EoUs requiring approval of the government will be dealt with by the DIPP and the DIPP will continue to be the administrative ministry for this purpose."

Applications for imports of capital goods or machinery would be handled by the DIPP. Applications involving investments from "countries of concern", requiring security clearance under to the Foreign Exchange Management Act and FDI policy would be processed by the home ministry.

The memorandum set a timeline of four weeks for transfer of all pending applications with the FIPB to the administrative ministries. The DIPP would handle the FIPB portal.

While FDI approvals in most sectors have been relegated to the ministries concerned, those relating to private security agencies would be decided by the home ministry. The DEA would clear proposals of financial services not under a regulator, or where there is more than one regulator or there is a doubt about the regulator, the ministry said.

If FDI applications lack clarity on the administrative department, the DIPP will identify the ministry. The memorandum added the ministry concerned would have to seek Cabinet nod wherever required.

All past and future litigation and liabilities would be handled by the administrative department and about 4,500 reference and record files with the FIPB secretariat would be transferred to the ministries concerned.