Finance Ministry is working on war footing to replace the existing system of approvals for foreign direct investments flowing into India.
The new system will replace the three decade old Foreign Investment Promotion Board (FIPB).
“We have set a strict deadline for us so that we can announce the new approval system within the next two months,” said a senior official in the finance ministry who did not wish to be named.
“The plan, structure and everything related to the process will be announced much sooner,” said Shaktikanta Das, the economic affairs secretary. Das heads the FIPB, now.
The Modi-government is focussing on ease of doing business and ease in approval seeking for foreign investors is a top priority. The phasing out of the FIPB is also a move in that direction. So finance minister Arun Jaitley announced the closure of FIPB in Budget 2017.
“FIPB has successfully implemented e-filing and online processing of FDI applications. We have now reached a stage where FIPB can be phased out. We have therefore decided to abolish FIPB in 2017-18,” Jaitley had said in his budget speech.
“We are working out the details on how to handle foreign direct investment proposals. Where will the application come and how will a final decision be taken on the proposals,” said another source in finance ministry, who also did not wish to be named.
FIPB was initially set up under the Prime Minister’s Office (PMO) as part of the economic reforms of 1991. In 2003, it was transferred to the Finance Ministry.
FIPB is an inter-ministerial group headed by the Secretary DEA. The other members are Secretaries of Department of Industrial Policy & Promotion(DIPP), Ministry of Commerce & Industry, Ministry of External Affairs and Ministry of Overseas Indian Affairs. The home ministry is involved for handling proposals in sectors where security issues are involved such as telecom, financial services, aviation and defence
As per Commerce Ministry data, FDI inflows showed a five fold increase in five months from Rs 22,345 crore in April to Rs 1,44,674 crore in September 2016 .