Farewell FIPB, Af­ter Two Decades

The Economic Times - - Front Page - Ruchika.Chi­tra­van­shi@ times­group.com

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F₹ ₹ inance min­is­ter Arun Jait­ley has pro­posed abo­li­tion of the For­eign In­vest­ment Pro­mo­tion Board (FIPB), a move that sets the stage for more re­forms in the FDI pol­icy . Housed in t he f i na nc e min­ist r y ’s De­part­ment of Eco­nomic Af­fairs, the FIPB is an in­ter-min­is­te­rial body re­spon­si­ble for pro­cess­ing of FDI pro­pos­als and mak­ing rec­om­men­da­tions for gov­ern­ment ap­proval.

It was ini­tially con­sti­tuted un­der the Prime Min­is­ter’s Of­fice in the wake of the eco­nomic lib­er­al­i­sa­tion drive of the early 1990s. “FIPB has suc­cess­fully im­ple­mented e-fil­ing and on­line pro­cess­ing of FDI ap­pli­ca­tions,” Jait­ley said in his Bud­get speech. “We have now reached a stage where FIPB can be phased out.”

The gov­ern­ment is yet to an­nounce the modal­i­ties of the new sys­tem of pro­cess­ing ap­pli­ca­tions, which fall un­der the ap­proval route. The fi­nance min­is­ter said a road map for the post-FIPB sce­nario will be an­nounced in the next few months. “We will have to see how the pol­icy will de­velop in the days to come and if con­cerned de­part­ments will be given the au­thor­ity to con­sider the FDI pro­pos­als,” a se­nior gov­ern­ment of­fi­cial told ET.

The gov­ern­ment is also con­sid­er­ing further lib­er­al­i­sa­tion of the FDI pol­icy and will make nec­es­sary an­nounce­ments in the due course, the min­is­ter said. More than 90% of FDI in­flows are now through the au­to­matic route. FDI in In­dia rose to ₹ 145,000 crore in the first half of 2016-17, a 35.5% jump over ₹ 107,000 crore in the year-ago pe­riod. The in­crease came at a time when global FDI in­flows fell 5%.

Ex­perts said they will wait to see if abo­li­tionoftheFIPBwill­bringabouteaseof do­ing­busi­nes­sand­sim­pli­fypro­ce­dures. The FIPB had been meet­ing twice a month since 2015 to speed up ap­provals. “FIPB was pro­cess­ing the for­eign in­vest­ment pro­pos­als in a time-bound man­ner, in con­sul­ta­tion with var­i­ous min­istries. We have to wait for the an­nounce­ment of the road map for for­eign in­vest­ment pro­pos­als to un­der­stand the im­pact of the move,” said Devraj Singh, ex­ec­u­tive di­rec­tor-tax and reg­u­la­tory ser­vices at Ernst & Young.

TheDepart­mentofIn­dus­tri­alPol­i­cyandPro­mo­tio­nis ex­pected to re­lease the an­nual con­sol­i­dated FDI pol­icy cir­cu­lar by March. “It will be in­ter­est­ing to see the ap­proval mech­a­nism that will be put in place for sec­tors cur­rently un­der ap­proval route such as retail trade, de­fence and in-kind (non-cash) FDI in­vest­ments,” said Rad­hika Jain, di­rec­tor at Grant Thorn­ton Ad­vi­sory. ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹

DIPP to re­lease the an­nual con­sol­i­dated FDI pol­icy cir­cu­lar by March

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