Union Cabinet scraps 25 years old Foreign Investment Promotion Board (FIPB)मोदी सरकार ने खत्‍म किया 25 साल पुराना FIPB

BY DEEPSHIKHA SIKARWAR , ET BUREAU | MAY 24, 2017, 07.42 PM IST

NEW DELHI: The Union Cabinet today approved the dismantling of 25-year-old Foreign Investment Promotion Board (FIPB) removing one layer of decision making for FDI approvals. 

FDI proposals will now be cleared by the concerned ministries and in cases where government has security concerns the matter will also be approved by the home ministry. There are 11 sectors which require government approval for getting FDI. 

Finance Minister Arun Jaitley has proposed abolition of FIPB in the Budget 2017-18. “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.” Government wants to ease the processes for FDI approval in sectors which are under the approval route. 

More than 90 per cent of FDI inflows are through the automatic route. India recorded the highest ever foreign direct investments in a year in 2016-17 at $43 billion up 9 per cent over last year. 

Housed in the finance ministry’s Department of Economic Affairs, the FIPB has been an inter-ministerial body responsible for processing of FDI proposals and making recommendations for government approval for the last 25 years. It was initially constituted under the Prime Minister's Office in the wake of the economic liberalization drive of the early 1990s. It was brought under the Department of Industrial Policy and Promotion in 1996 and transferred back to the department of economic affairs in 2003 

The FIPB had been meeting twice a month since 2015 to speed up approvals. 

The government had notified several reforms to simplify the FDI policy, bringing sectors such as pharmaceuticals, defence and single-brand retail under the automatic route. 

Government is also considering further liberalisation of FDI policy and will make necessary announcements in the due course. Finance Minister Arun Jaitley in his Budget speech on February 1 announced scrapping of the inter-ministerial body, which comes under the finance ministry's Department of Economic Affairs. 

In his budget speech Jaitley had said, "The Foreign Investment Promotion Board 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 the FIPB in 2017-18. A roadmap for the  same will be announced in the next few months." 

The FIPB was initially constituted under the Prime Minister's Office in the wake of economic liberalisation in the early 1990s. 

Several experts have opined in the past that the need to get FIPB approval often leads to delays in foreign investments coming in. 

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