Union Finance Ministry has said that the ministries tasked with clearing foreign direct investment (FDI) proposals in the 12 sectors that need government approval would have to take a decision within 60 days.
With an objective to enhance ease of doing business and to promote the principle of Maximum Governance and Minimum Government, Union Cabinet had recently approved the abolition of Foreign Investment Promotion Board (FIPB), which was in charge of clearing foreign direct investment (FDI) proposals since 25 years.
Mechanism that will replace FIPB:
- A memorandum by Finance Ministry has stated that Department of Industrial Policy and Promotion (DIPP), in consultation with the administrative ministries, would frame standard operating procedures to process FDI
- These operating procedures will be framed by maintaining consistency of treatment and uniformity of approach.
- All pending applications with the FIPB will be transferred to administrative ministries within four weeks time.
- All pending proposals will be reviewed quarterly by a panel led by the secretaries of the Department of Economic Affairs (DEA) and the Department of Industrial Policy and Promotion (DIPP).
- Portal of FIPB will now be handled by DIPP.
- If FDI application cannot be clearly ascribed to an administrative ministry, DIPP will take a decision to identify the same.
Sectors/Business and FDI Approving Authority:
|Sector/Business||FDI Approving Authority|
|Defence||Department of Production, Defence ministry|
|Cases relating to FDI in small arms||Home Affairs Ministry|
|Broadcasting||Information and Broadcasting Ministry|
|Print Media||Information and Broadcasting Ministry|
|Civil Aviation||Civil Aviation Ministry|
|Telecom||Telecommunications Department, Communications Ministry|
|Trading (Single brand and food products retail trading)||Department of Industrial Policy and Promotion, Commerce and Industry Ministry|
|Financial Services not regulated by a regulator or where there is more than one regulator or in respect of which there is a doubt about the regulator||Economic affairs department, Finance Ministry|
|Banking (Private & Public)||Financial Services Department, Finance Ministry|
|Pharmaceuticals||Pharmaceuticals Department, Chemicals and Fertilisers Ministry|